Crypto Industry Organization Committee for Crypto Innovation Leads Submission of 238-Page Report, Calls on U.S. SEC to Clarify Regulatory Boundaries for On-Chain Treasuries

TechFlow reported on October 29 that, according to Crypto in America, the cryptocurrency industry organization Crypto Council for Innovation (CCI) and its members, including Bitwise, Galaxy Digital, and Morpho, submitted a 238-page report to the U.S. Securities and Exchange Commission (SEC). The report calls on regulators to clarify how existing securities laws apply to on-chain Vaults and to establish a differentiated regulatory framework based on the degree of control human operators exert over user assets and investment decisions.

CCI maintains that regulators should focus primarily on the discretion of vault operators over investment decisions. Vaults that automatically execute lending strategies according to fixed rules, and products that permit operators to independently select investment targets, modify lending terms, or redistribute funds, should be subject to distinct regulatory standards. The higher the operator's control over investment decisions, the stronger the justification for applying securities regulation to such products. Regarding on-chain Vaults that could be classified as investment companies, CCI advises the SEC to look to the development model of ETFs, initially granting regulatory exemptions on a case-by-case basis before evaluating the creation of unified rules based on industry progression.