Crypto Vault Regulation Divides Aave, Kamino and Morpho

US crypto vault regulation remains unsettled as DeFi firms urge the SEC not to treat human involvement alone as grounds for securities oversight. Aave, Kamino and Veda say vaults should not automatically be classified as securities when users retain ownership of their assets and can withdraw them; risk curators or DAOs making decisions does not by itself amount to custody or regulated investment management. They also argue that securities rules generally require a legally defined common investment enterprise or issuer. A competing framework supported by Morpho and the Crypto Council for Innovation says curator control over investment strategy—such as selecting lending markets—can indicate that some vaults are securities. The groups broadly agree that paid advice involving securities may still fall under the Investment Advisers Act. The SEC has acknowledged that vaults differ, but has not resolved how human discretion should be assessed. The debate gained significance as crypto vault assets under management reportedly climbed 61% in the second half, from $7 billion to $11 billion. Any eventual regulatory approach could affect DeFi product design, compliance costs and investor access, although the filings do not establish a new rule.