Aave Labs, Kamino and Veda submit DeFi lending framework to SEC

On October 26, 2026, Aave Labs, Kamino Foundation, and Veda Tech Labs Inc. submitted a confidential legal framework to the SEC's Crypto Task Force, followed by a public release on November 3. The coalition contends that non-custodial DeFi lending protocols and vaults fall outside U.S. securities laws, including the Howey and Reves tests, because users maintain asset ownership and receive no central return promises. The filing follows a prior SEC probe into Aave closed in December 2025 without enforcement.

Submission of the DeFi legal framework

• ▪Aave Labs, Kamino Foundation, and Veda Tech Labs Inc. submitted a paper to the SEC's Crypto Task Force proposing a legal framework for DeFi lending
• ▪Aave Labs, Kamino Foundation, and Veda Tech Labs Inc. released a public summary of their SEC DeFi legal framework submission

Arguments against classification as securities

• ▪The framework submitted by Aave Labs, Kamino, and Veda to the SEC on October 26, 2026 asserts that DeFi lenders earn interest based on published per-unit rates rather than sharing in collective business profits or relying on central entity promises
• ▪Aave Labs, Kamino, and Veda argue that users depositing crypto or borrowing against collateral in DeFi lending protocols do not enter securities arrangements under the Howey test, Reves, the Investment Company Act, or the Investment Advisers Act

Arguments on DAO governance roles

• ▪The Aave Labs, Kamino, and Veda framework paper asserts that decentralized lending markets can continue operating under existing code rules even if a DAO stops making governance decisions
• ▪The Aave, Kamino, and Veda legal framework paper submitted to the SEC highlights that mandatory public notice and time delays for DAO governance changes allow users to withdraw assets before new protocol rules take effect

Legal status of non-custodial vaults

• ▪The Aave Labs, Kamino, and Veda submission to the SEC acknowledges that vault curators who make investment decisions involving securities may still qualify as investment advisers under federal law despite not taking custody of user assets
• ▪The legal paper submitted by Aave, Kamino, and Veda to the SEC argues that non-custodial vault users retain direct ownership of deposited assets despite limited allocation choices made by curators

Previous SEC interactions with Aave Labs

• ▪SEC met with Aave Labs representatives and Winston & Strawn LLP lawyers to discuss the ERC-4626 vault standard, yield generation, and Aave V4 architecture
• ▪An SEC investigation into the Aave protocol opened around 2021 concluded in December 2025 without any enforcement recommendation

Aave protocol updates

• ▪Aave restricted tBTC lending after Threshold suspended redemptions
• ▪A governance proposal sought approval to deploy Aave V4 on Monad featuring a lending hub for tokenized stocks, ETFs, and U.S. Treasury bills