The Crypto Council for Innovation (CCI) has proposed a new framework to bring crypto vaults under U.S securities laws.
In a 238-page report that was published on 29th October, the CCI outlined how regulators can assess different vault structures under existing securities regulations. This includes the Securities Act of 1933, the Investment Company Act of 1940, and the Investment Advisers Act of 1940.
90-year-old securities rules tested
For those unaware, crypto vaults are smart contracts that accept users’ token deposits and deploy them into financial strategies such as lending, borrowing, and investments to generate returns.
And, now their adoption is expanding beyond decentralized finance (DeFi), with traditional financial institutions also exploring their potential. In fact, according to S&P Global, assets deposited in vaults touched $131 billion in April 2026.
Hence, the CCI, along with members from Bitwise, Galaxy Digital, and Morpho, is arguing that crypto vaults should not automatically fall outside U.S federal securities laws just because they operate via blockchain technology and smart contracts.
CCI’s dual framework for crypto vaults
In its detailed report, CCI came up with a two-sided ‘Control Framework’ to resolve how much authority human operators hold over deposited assets. Additionally, the framework would also sort out how much control investors have over their funds.
Additionally, the report examined four factors on the operator’s side, which included mandate, execution, governance, and disposition. Here, the report assessed whether operators can select investment strategies, reallocate capital, change protocol rules, or move deposited assets.
Meanwhile, for the depositor’s side, there were six conditions considered. These included, comprehensibility, verifiability, observability, predictability, notice, and actionability.
So, the crux here is simple, and that is CCI wants vaults with immutable smart contracts, transparent operations, limited human discretion, and permissionless withdrawals to face a different regulatory assessment from those where operators retain significant control over investment decisions.
CCI’s way of bringing regulatory clarity to crypto markets
Interestingly, the proposal also draws parallels with Section 10301 of the proposed CLARITY Act. For those unaware, the latter addressed non-decentralized finance protocols based on whether identifiable individuals or groups could control or materially alter their functionality.
And, therefore, the CCI wants regulators to adopt a similarly control-based approach. In fact, for regulatory clarity, CCI also wants the SEC to follow the approach it previously adopted for ETFs. This would involve granting individual exemptions to qualifying vault structures under Section 6(c) of the Investment Company Act before gradually introducing broader, standardized rules.
Commenting on the same, Horsley added,
We worked with regulators for years to help make crypto ETFs possible. We’re happy to collaborate again, this time on vaults.
The red flag in question
Needless to say, the proposal also echoes SEC Commissioner Hester Peirce’s 22nd July statement, Headstands and Summervaults, in which she cautioned, against treating all crypto vaults alike.
Vaults are not uniform
Here, it’s worth pointing out a recent report by AMBCrypto which highlighted how Web3 protocols are increasingly moving away from their original promises of openness, permissionlessness, and decentralization.
The report stressed on projects such as Hyperliquid, Aave, and Polygon that have adopted models that prioritize internal vaults, buybacks, and treasury accumulation over directly distributing value to token holders.
Final Summary
- The CCI is arguing that crypto vaults should not automatically fall outside U.S federal securities laws.
- According to S&P Global, assets deposited in vaults hit $131 billion in April 2026.
