The Crypto Council for Innovation has launched a new industry group, the Vault Coalition, bringing together major crypto firms to address regulatory uncertainty surrounding crypto vaults. Participants include Galaxy, Morpho, BitGo, a16z, the Avalanche Policy Coalition, and Sharplink.
The coalition aims to establish legal and technical standards for vault-based products as decentralized finance continues to grow and attract more institutional participation.
What crypto vaults are and why regulation matters
Crypto vaults are smart contracts that pool digital assets and deploy them to generate yield, issuing receipt tokens that represent ownership. These systems have expanded rapidly over the past year as firms look to scale on-chain yield strategies.
However, existing financial regulations do not clearly define how such products should be treated. This lack of clarity has slowed adoption among larger financial firms, which typically require defined compliance frameworks before launching or using new products.
Morpho general counsel Robins said clearer legal structures are essential for banks and asset managers to move forward with vault offerings. The coalition plans to translate real-world operational experience into policy recommendations and technical standards.
Alignment with evolving U.S. regulatory approach
The group’s formation comes as U.S. regulators signal a shift toward more structured crypto oversight. The Securities and Exchange Commission recently introduced a token taxonomy proposal and launched “Project Crypto,” an initiative led by chair Atkins to modernize rules for blockchain-based markets.
Atkins has indicated that regulators are working on clearer definitions for software-driven financial systems under federal law. The coalition cited these remarks as support for its effort to align regulation with how decentralized systems actually function.
A draft SEC strategy also points to a broader move away from enforcement-led oversight toward a more formal rulemaking framework, which could create a clearer pathway for vault products.
Rapid growth in vaults and defi activity
The push for standards follows a sharp rise in capital flowing into decentralized finance. Total value locked across defi protocols is estimated between $130 billion and $140 billion in early 2026.
Vault-specific smart contracts account for a significant share of that activity. Recent data suggests they hold around $120.4 billion in assets, even after a market downturn in late 2025, highlighting sustained demand for automated yield strategies.
Institutional adoption accelerates
Members of the Vault Coalition illustrate the broader trend toward institutional use of these systems.
Morpho has grown into one of the largest lending protocols, with $11.78 billion locked as of May 2026. Part of that growth has been driven by integrations supporting more than $2 billion in loans originating from Coinbase.
BitGo, another coalition member, recently partnered to launch an institutional platform built around vault architecture. The platform allows firms to access on-chain yield while keeping assets under qualified custody, addressing key security and compliance concerns.
This hybrid approach reflects a wider effort to bridge traditional finance requirements with decentralized infrastructure.
Industry seeks to shape standards
The Vault Coalition plans to publish legal analyses and policy guidance outlining compliance expectations for vault operators. These materials are expected to influence how regulators and market participants define best practices.
Traders and market observers will be watching closely, as the group’s work could help establish the framework for regulated on-chain asset management and accelerate broader adoption of decentralized financial products.
For deeper insight on evolving US crypto rules and vault oversight, explore our guide on the possible future of crypto regulation.
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