DeFi vault regulation splits Aave, Kamino and Veda from Morpho: Details - AMBCrypto

On November 3, Aave, Solana-based Kamino, and crypto vault infrastructure firm Veda submitted their position to the SEC regarding the regulation of yield-generating crypto vaults. The trio argues that securities regulation should follow the actual rights, obligations, and powers created by onchain arrangements rather than automatically applying securities laws to vaults with human discretion.

Different approaches

The trio contends that provided users maintain asset ownership and withdrawal rights, vaults should be considered non-custodial. This contrasts with the framework supported by Morpho and the Crypto Council for Innovation, which suggests that vaults managed by risk curators could be deemed securities since these curators act as managers selecting lending markets.

Aave, Kamino, and Veda emphasize that DAOs serve governance purposes rather than management functions. Regarding vaults managed by risk curators, they maintain that while these curators might be considered investment advisers, they don't have custody since the code prevents them from accessing users' assets.

Growing market

Crypto vaults, which function like on-chain managed funds allowing users to automate yield strategies, have seen significant growth. In the second half of 2026, vault traction increased by 61%, rising from $7 billion to $11 billion in assets under management. This growth is expected to accelerate alongside the broader tokenization boom.

The SEC has acknowledged that not all vaults are identical in a recent guideline, though it remains unclear how the agency will address the specific question of human intervention in vault operations. The division among major DeFi platforms highlights the complexity of creating appropriate regulatory frameworks for rapidly evolving crypto products.