Aave, Kamino and Veda Tell the SEC Onchain Lending Is Not a Security

Aave Labs, Kamino and Veda have asked the US Securities and Exchange Commission to confirm that onchain lending already sits outside the securities laws. The three filed a confidential legal framework on 26 October with the SEC's Crypto Task Force and its Division of Corporation Finance, then published a summary of it. They ask for no exemption and no safe harbor. Their case is that a lending protocol takes nobody's capital and promises nobody a return, so there is no investment contract to register.

No lender, no loan, no promise

The framework starts at the base layer, the lending protocol itself, on the reasoning that any vault built on top inherits whatever status the protocol has. There, the authors say, a supplier deposits assets and a borrower draws against collateral they already own. No entity receives that money and undertakes to return it with a profit. Howey, the 1946 Supreme Court test for when an arrangement is an investment contract, asks for an investment of money in a common enterprise with profits expected from the efforts of others. The submission argues the common-enterprise element fails outright, because interest accrues at a published per-unit rate and one supplier's return does not depend on another's. It cites Aguilar v. Baton Corp. for the narrower proposition that using the same code as other people does not make a joint enterprise of it. SEC staff have already placed token buybacks and network upgrades outside Howey in published guidance this year.

"The securities laws protect investors by regulating the people who make promises to them," the public summary said.

The timelock does the work

Governance is the thinnest part of an argument like this, because a token-holder vote can change terms a depositor accepted earlier. The answer offered is that governance sets the rules of a venue and not the fate of anyone's money: which assets are listed, which interest-rate model applies, what counts as collateral, and where liquidation sits. Those are market parameters. The authors lean on the timelock, the enforced delay between a vote passing and a change taking effect, which they say leaves a depositor time to withdraw before the new rule reaches them. Their own formulation is that governance is administration, not management. The same token-holder process has been asked to rank DAO money ahead of stakers in three V4 markets.

Vaults, curators and the harder cases

The second half of the paper deals with non-custodial vaults, pooled strategies that sit on top of a lending protocol and are steered by a curator. These are not investment companies, the authors say, because a depositor keeps ownership of a proportional share and the curator cannot withdraw or redirect it. Discretion exists, inside a mandate published in advance and accepted before deposit. Crypto Economy, writing on 3 November, said the paper also concedes that a curator exercising discretion over securities could meet the investment-adviser definition even without custody. TechFlow's compilation the next day adds that actively curated vaults and performance fees are the harder questions. Neither point appears in the public summary read for this article, and each rests on a single outlet.

Three dates for one publication

The 26 October submission date is agreed by every account read here. The date the summary went public is not. Aave's own policy page carries 2 November. Crypto Economy's text says 2 November as well, yet the Aave post embedded in that same article is dated 3 November and opens "Today, we are releasing a public summary". TechFlow, compiling from the same post on 4 November, dates the summary to that day. We could not establish which stamp supersedes which. What follows is not on a published calendar either: the three asked for a meeting with SEC staff, and on Crypto Economy's account alone they were still waiting on a date for a first technical session at the time of writing.