The Crypto Council for Innovation has proposed a way for U.S. regulators to review crypto vaults under existing securities laws. The 238-page report, published Oct. 29, argues that vaults should not automatically sit outside federal rules just because they run on blockchain technology and smart contracts. Bitwise, Galaxy Digital and Morpho backed the effort. Bitwise CEO Hunter Horsley said the company was glad to take part and argued that vaults will change capital markets.
Crypto vaults are smart contracts that take user deposits and put them into strategies such as lending, borrowing and investing. The report notes that adoption is moving beyond DeFi. It cites S&P Global data showing vault deposits reached $131 billion in April 2026. That growth makes the regulatory question more urgent, perhaps, because traditional firms are now looking at similar structures.
A Control Test for Operators and Depositors
At the center of the proposal is a two-sided control model. One side asks how much power an operator has over deposited assets. The report looks at mandate, execution, governance and disposition. In simple terms, can the operator pick strategies, move capital, change protocol rules or shift assets? The other side asks what depositors can understand and verify. It lists six conditions: comprehensibility, verifiability, observability, predictability, notice and actionability.
The point is to separate vaults with immutable contracts, transparent operations, limited human discretion and permissionless withdrawals from those where operators keep meaningful control. That distinction matters. A vault that looks decentralized on paper may still depend on a small team to change rules or reallocate funds.
ETF-Style Exemptions and CLARITY Act Parallels
CCI also points to Section 10301 of the proposed CLARITY Act, which used control by identifiable people or groups as a test. The group wants regulators to take a similar approach. It suggests the SEC could grant individual exemptions to qualifying vault structures under Section 6(c) of the Investment Company Act, then move toward broader rules later. That path echoes how the SEC handled crypto ETFs over time.
The report also reflects comments from SEC Commissioner Hester Peirce, who warned against treating all vaults alike in her July 22 statement titled Headstands and Summervaults.
A Caution on Decentralization Claims
There is a caveat. A recent AMBCrypto report said some Web3 projects are moving away from early promises of openness and permissionless access. It named Hyperliquid, Aave and Polygon as examples of models that lean on internal vaults, buybacks or treasury accumulation. If that trend continues, regulators may need to look closely at who really controls the assets, not just at the code.
