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Aave Labs, the Kamino Foundation and Veda Tech Labs Inc. have asked the U.S. Securities and Exchange Commission to treat most yield-generating crypto vaults and decentralized lending arrangements as outside federal securities law, according to AMBCrypto. The three groups submitted a confidential legal framework and requested a meeting with SEC staff, setting up a public disagreement with Morpho and the Crypto Council for Innovation over how much human discretion inside a vault should matter.
Key facts
- The submission went to the SEC’s Crypto Task Force and its Division of Corporation Finance on October 26, 2026, Crypto Briefing reported; a public summary followed between November 2 and 3, 2026.
- Vault assets under management rose 61% in the second half of 2026, from $7 billion to $11 billion, per AMBCrypto.
- More than $50 billion in digital assets was reported across lending protocol markets by October 2026, according to Crypto Briefing.
- The SEC opened an investigation into the Aave protocol around 2021, and that probe concluded in December 2025 without an enforcement recommendation, Crypto Briefing reported.
- Morpho and the CCI argue that vaults run by risk curators such as Steakhouse or Gauntlet could be deemed securities, while Aave, Kamino and Veda call DAOs vehicles for governance rather than management.
Two tests for the same product
The joint framework runs decentralized lending protocols and non-custodial vaults through four standards of U.S. securities law: the Howey test for investment contracts, the Reves analysis for debt-like instruments, the Investment Company Act of 1940 and the Investment Advisers Act. On each, the groups concluded the arrangements do not qualify — no investment contract, no Reves exposure, and no advisory relationship that would require custody rules.
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Their reasoning rests on ownership and control. Users keep their assets and can withdraw at will, so the vault can be treated as non-custodial even where a curator is paid to make decisions. In a post on X, Aave argued that a curator paid to make investment decisions about securities may be an investment adviser but does not have custody, because the code does not let it take users’ assets. The groups said securities regulation should follow the rights, obligations and powers an arrangement actually creates.
The CCI framework backed by Morpho reads the same facts differently. Some curator-run vaults act as managers picking lending markets, which in that view can make them securities, and even DAO-run protocols may be partly seen as centralized managers. The two camps therefore agree that not all vaults are alike but split on whether human intervention alone triggers securities law.
Why it matters
The filing is a legal argument from interested parties, not an SEC ruling, guidance or approval, and the agency has not adopted its conclusions. Its weight comes from the coalition: bringing in Solana-based Kamino and vault infrastructure firm Veda turns a single-protocol request into a sector position. Aave’s earlier engagement with the SEC also arrives after a long chapter closed — a probe opened around 2021 ended in December 2025 with no enforcement recommendation, as Crypto Briefing noted. If the agency engaged with the reasoning, reduced regulatory uncertainty could support liquidity and institutional interest in a market reported above $50 billion. Builders, meanwhile, have a template: the public summary lets other lending protocols test their own designs against the same four standards.
The agency has acknowledged that not all vaults are the same in a recent guideline, leaving the human-intervention question open. Vaults have also grown quickly, with AMBCrypto citing a 61% rise in assets under management in the second half of 2026, from $7 billion to $11 billion, and tying further expansion to tokenization.
What to watch
The immediate next step is whether SEC staff grant the requested meeting with Aave Labs, Kamino and Veda, and whether the Crypto Task Force or Division of Corporation Finance responds to the framework. How the SEC addresses human intervention in its guidance will decide which camp’s reading holds.
This article is informational only and is not financial advice; crypto markets are volatile and uncertain, and readers should do their own research.
Reported by AMBCrypto.
Sources: AMBCrypto, Crypto Briefing