Billions in cryptocurrency loans

A new form of lending in the cryptocurrency market is attracting even more capital, as well as the attention of American and European regulatory authorities. These are the so-called crypto vaults, digital "safe deposit boxes" that allow cryptocurrency holders to lend their assets to other investors, seeking higher returns. According to Blockworks data, more than $10 billion has been deposited in such structures, compared to about $4 billion in early 2025. The usual strategies promise returns of 3%-10%, while riskier options can offer as much as 20% or more. How crypto vaults work In contrast to traditional financial products, crypto vaults operate on decentralized finance (DeFi) platforms, utilizing smart contracts—code that automatically executes predetermined instructions on the blockchain—without necessarily requiring a central intermediary. Investors connect their digital wallets, deposit tokens, and choose an investment strategy. The "curator" plays a crucial role, acting much like a fund manager: selecting positions, determining risk limits, and collecting fees. Market supporters believe that vaults are the next step for digital assets, especially as stocks, investment funds, and other traditional investments are being converted into digital tokens. However, high returns do not mean the investment is safe. Leopold Wenger of the research firm Kaiko warns that many investors focus on interest rates without fully understanding the risk and liquidity indicators. Automated liquidations and cyberattacks One of the biggest problems is that the vault mechanisms can automatically liquidate positions when collateral loses its value or no longer meets the required conditions. During periods of high volatility, these sales may accelerate the drop in prices and quickly pass the crisis to other platforms. Andrew O’Neil of S&P Global Ratings points out that the problems in decentralized finance can spread faster than in traditional markets. Cyberattacks and code errors pose an additional threat. According to TRM Labs, $972 million was stolen from DeFi platforms in the first half of 2026. A characteristic example was the attack on the Resolv protocol in March. The USR token was used as collateral in some vaults, which were programmed to treat its value as stable at one dollar. Thus, they did not immediately recognize the actual price drop after the attack. Under the regulators' microscope Regulatory authorities are now examining whether certain activities require a stricter framework for supervision. In July, the U.S. Securities and Exchange Commission (SEC) reported that it is examining how vaults may fall under existing securities legislation. In Europe, ESMA proposed rules in September for entities that facilitate transactions or act as intermediaries between clients and decentralized finance services. The proposal also concerns cases where cryptocurrency service providers facilitate access to lending vaults. For curators, the prospect of falling under a regime similar to that of traditional fund managers creates uncertainty and additional compliance costs. The challenge for the authorities is to limit risks without stifling innovation. However, for investors, the main lesson remains clear: the attractive returns of crypto vaults are accompanied by real risks of capital loss, which can manifest suddenly and be difficult to control. Source: ot.gr