Bitwise, Galaxy Digital and Morpho Back CCI Framework for U.S. Crypto Vault Regulation
The Crypto Council for Innovation (CCI) has proposed a framework for assessing cryptocurrency vaults under existing U.S. securities laws, with support from industry participants including Bitwise, Galaxy Digital and Morpho. The proposal seeks to distinguish vaults based on how much control operators retain over deposited assets and how much authority investors have over their funds.
Published on October 29, the 238-page report examines how regulators could apply existing legislation, including the Securities Act of 1933, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, to different vault structures.
Crypto vaults are smart contracts that accept token deposits and deploy them into strategies such as lending, borrowing and investments to generate returns. Their use is expanding beyond decentralized finance (DeFi), with traditional financial institutions also exploring the structures. S&P Global data cited in the report's source coverage put assets deposited in vaults at $131 billion in April 2026.
CCI Proposes a Control-Based Framework for Crypto Vaults
The CCI argues that vaults should not automatically be excluded from federal securities regulation simply because they operate through blockchain technology and smart contracts. Instead, the proposed framework would assess the actual distribution of control within each vault.
The report outlines a two-sided Control Framework examining both the authority of vault operators and the level of control available to depositors. On the operator side, it considers four factors: mandate, execution, governance and disposition.
These factors examine whether an operator can choose investment strategies, reallocate deposited capital, modify protocol rules or transfer assets. The framework also evaluates depositors through six criteria: comprehensibility, verifiability, observability, predictability, notice and actionability.
Under this approach, vaults built around immutable smart contracts, transparent operations, limited human discretion and permissionless withdrawals could receive a different regulatory assessment from structures in which operators retain substantial authority over investment decisions and deposited funds.
Bitwise CEO Hunter Horsley expressed support for the initiative, saying, “Vaults are going to change capital markets. We’re delighted to get to be a part of it.”
Proposal Draws on the CLARITY Act and ETF Regulatory Approach
The CCI's proposal draws a parallel with Section 10301 of the proposed CLARITY Act, which addresses non-decentralized finance protocols by considering whether identifiable individuals or groups can control or materially change how those protocols function.
The council wants regulators to apply a similar control-based assessment to crypto vaults. It also recommends that the Securities and Exchange Commission (SEC) consider an approach resembling its earlier handling of exchange-traded funds (ETFs).
Under the suggested process, qualifying vault structures could initially receive individual exemptions under Section 6(c) of the Investment Company Act of 1940. Broader, standardized rules could then be introduced gradually, according to the proposal.
Horsley said Bitwise was willing to work with regulators on the issue, drawing a comparison with the industry's previous efforts to establish a path for crypto ETFs. “We worked with regulators for years to help make crypto ETFs possible. We’re happy to collaborate again, this time on vaults,” he said.
SEC Commissioner Peirce Has Warned Against Treating Vaults Alike
The proposal also aligns with comments from SEC Commissioner Hester Peirce in her July 22 statement, “Headstands and Summervaults.” Peirce cautioned against treating all cryptocurrency vaults as if they shared the same structure and characteristics.
The debate comes as questions grow about how much control crypto protocols retain over their operations and how value is distributed within their ecosystems. A separate report by AMBCrypto highlighted projects including Hyperliquid, Aave and Polygon as examples of protocols moving toward models that emphasize internal vaults, buybacks and treasury accumulation rather than direct value distribution to token holders.
The CCI framework would give regulators a structured way to examine differences between vault designs instead of relying solely on whether a product uses blockchain technology. The report presents a proposed regulatory approach; it does not establish that the SEC has adopted the recommendations or that new rules have been finalized.
source: ambcrypto
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
Check out other news and articles on Google News
Disclaimer:
The articles on Hokanews are here to keep you updated on the latest buzz in crypto, tech, and beyond—but they’re not financial advice. We’re sharing info, trends, and insights, not telling you to buy, sell, or invest. Always do your own homework before making any money moves.
Hokanews isn’t responsible for any losses, gains, or chaos that might happen if you act on what you read here. Investment decisions should come from your own research—and, ideally, guidance from a qualified financial advisor. Remember: crypto and tech move fast, info changes in a blink, and while we aim for accuracy, we can’t promise it’s 100% complete or up-to-date.