The Crypto Council for Innovation (CCI) has proposed a new framework to bring crypto vaults under U.S. securities laws. In a report published on October 29, the CCI outlined how regulators can assess different vault structures under existing securities regulations, including the Securities Act of 1933, the Investment Company Act of 1940, and the Investment Advisers Act of 1940.
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. According to S&P Global, assets deposited in vaults reached $131 billion in April 2026, reflecting growing adoption beyond decentralized finance into traditional financial institutions.
Control-Based Regulatory Framework
The CCI's proposal introduces a dual framework to assess vault structures based on two key dimensions: the level of control human operators retain over deposited assets, and the level of control investors maintain over their funds.
On the operator side, the framework examines four factors: mandate, execution, governance, and disposition. These assess whether operators can select investment strategies, reallocate capital, change protocol rules, or move deposited assets.
For depositors, the framework considers six conditions: comprehensibility, verifiability, observability, predictability, notice, and actionability. The CCI argues that vaults with immutable smart contracts, transparent operations, limited human discretion, and permissionless withdrawals should face different regulatory assessment from those where operators retain significant control over investment decisions.
Industry Support and Regulatory Precedent
Bitwise CEO Hunter Horsley stated that the organization is pleased to support the proposal. Horsley noted that Bitwise previously collaborated with regulators to help make crypto ETFs possible and expressed willingness to collaborate again on vaults.
The proposal draws parallels with Section 10301 of the proposed CLARITY Act, which addressed non-decentralized finance protocols based on whether identifiable individuals or groups could control or materially alter their functionality. The CCI recommends that regulators adopt a control-based approach and that the SEC follow the model it previously used for ETFs, granting individual exemptions to qualifying vault structures under Section 6(c) of the Investment Company Act before introducing broader standardized rules.
The framework aligns with a July 22 statement by SEC Commissioner Hester Peirce cautioning against treating all crypto vaults alike, reflecting growing recognition that vault structures vary significantly in their governance and operational characteristics.
