The groups argue that decentralized lending protocols and non-custodial vaults fall outside federal securities laws, and they have asked SEC staff for a meeting
Aave Labs has taken its case for DeFi lending straight to the regulator. Together with the Kamino Foundation and Veda Tech Labs Inc., it submitted a confidential legal framework to the SEC and requested a meeting with agency staff.
The core argument fits on an index card. People who supply assets to a lending protocol, or borrow against their own collateral, are not entering securities arrangements.
What the groups sent to the SEC
The submission went in on October 26, 2026. It was addressed to the SEC’s Crypto Task Force and to its Division of Corporation Finance.
The analysis covers two product types: decentralized lending protocols and non-custodial vaults. Non-custodial means users keep control of their own funds rather than handing them to a company that holds the money for them.
The framework tests these products against four pillars of US securities law. The first is the Howey test, the standard used to decide whether an arrangement counts as an investment contract. The second is Reves, the analysis used for debt-like instruments. The third and fourth are the Investment Company Act of 1940 and the Investment Advisers Act.
On all four counts, the groups reached the same conclusion. In their view, these arrangements are not investment contracts, are not caught by Reves, and do not create advisory relationships that would require custody rules.
The ownership argument
The emphasis falls on ownership and control. According to the groups, participants in these protocols keep both throughout.
Aave Labs stressed two further points. First, the protocols make no promises of repayment. Second, decisions run through transparent, community-led governance rather than through traditional investment management.
The groups published a public summary of the framework between November 2 and 3, 2026. The full submission remained confidential.
The stakes are not small. By October 2026, more than $50 billion in digital assets was reported across lending protocol markets.
Aave’s history with the SEC
This is not Aave’s first conversation with the agency. The filing continues earlier engagement by Aave Labs on how crypto assets should be regulated.
It also arrives after a long chapter closed. The SEC opened an investigation into the Aave protocol around 2021. That probe concluded in December 2025 without an enforcement recommendation.
The coalition is also worth noting. Bringing in Kamino and Veda turns this from a single-protocol plea into something closer to a sector position.
What this means for DeFi lending
The most important thing to understand is what this filing is not. It is a legal argument submitted by interested parties. It is not an SEC ruling, guidance or approval.
The SEC has not adopted these conclusions. The groups have only requested a meeting with staff.
If the agency were to engage with or accept this reasoning, the effects could be meaningful. The research behind this filing suggests that reduced regulatory uncertainty could support liquidity and attract institutional interest to a market already reported above $50 billion.
For builders, the filing offers a template. Other lending protocols can study the public summary and test their own designs against the same four frameworks.
For the SEC, the submission is an invitation to put a position on record. The agency’s Crypto Task Force exists in part to field exactly these kinds of approaches.
