Crypto Council launches Vault Coalition for regulatory clarity

On Friday the Crypto Council for Innovation launched the Vault Coalition. The effort is led by Galaxy and Morpho and includes BitGo, venture firm a16z, the Avalanche Policy Coalition and Sharplink. The coalition will produce legal analysis and policy recommendations to clarify the regulatory treatment of crypto vaults.

Crypto vaults are smart contracts that pool deposited digital assets to generate yield and issue vault receipt tokens that represent each depositor's share. Over the past year firms including Kraken and Tesseract introduced vault products for institutional and retail users.

The coalition identifies regulatory uncertainty as the main barrier to wider institutional adoption. Morpho general counsel Christopher Robins said in the coalition's statement: ‘We are at an inflection point. Institutional participants are prepared to deploy, but they require a clear legal roadmap to move forward. The Vault Coalition exists to transform industry expertise into the foundational standards the market demands.'

The group plans to draft legal analysis, set policy principles and seek clarity on how vaults should be treated under current and proposed rules. The coalition wrote that regulatory treatment should be based on how vault structures actually function rather than on analogies to traditional financial products.

U.S. regulators have recently taken steps to update their approach to digital assets. The Securities and Exchange Commission released a token taxonomy and its chair, Paul Atkins, has advanced ‘Project Crypto' to review agency rules for digital-asset applications. Atkins also requested clearer guidance on the regulatory status of vaults and other software-based structures last month.

Members of the Vault Coalition represent infrastructure providers, investors and policy groups involved in building and financing crypto platforms. The group said it will translate technical and market experience into papers and policy recommendations for regulators, market participants and lawmakers, and will monitor enforcement and rulemaking as it develops standards.

Coalition leaders added the effort aims to reduce legal ambiguity so institutional participants can deploy vaults within a more predictable compliance framework.