Industry advocates argue DeFi vault regulation should focus on discretionary asset managers rather than non-custodial infrastructure as tokenized asset management moves toward institutional adoption.
DeFi & Yields ·
Industry participants are calling for regulatory frameworks that distinguish between discretionary asset managers operating DeFi vaults and the non-custodial infrastructure itself, as tokenized asset management matures toward institutional use. The argument centers on applying oversight to the human decision-makers who direct vault strategies rather than the underlying smart-contract protocols that execute them without custodial control.
Vaults function as smart-contract-based containers that hold digital assets and enforce predefined investment rules, allowing users to deposit tokens and receive vault shares representing proportional claims on pooled holdings. The structure abstracts complexity by automating yield generation, rebalancing, and compliance logic onchain—distinguishing vaults from standard wallets or passive liquidity pools. Projects including Kamino, Catalysis, and others have introduced tools such as whitelisted reserves and vault-native risk coverage to strengthen institutional adoption.
The regulatory question remains unsettled: whether supervisory attention should focus on vault curators making active allocation decisions or whether existing smart-contract auditing and transparency standards suffice for non-custodial infrastructure. The distinction carries material weight as institutional capital explores onchain yield strategies but may require different treatment under securities or investment adviser frameworks depending on how discretion is defined.