Standard & Poor's Global Ratings (S&P P Global Ratings) has launched a risk assessment framework for digital asset lending vaults. As on-chain investment products receive increasing attention, such assessments are also being put into practice.
According to the announcement on Monday, the framework will evaluate the vault from six aspects: portfolio credit quality risk, liquidity mismatch risk, curator risk, blockchain risk, protocol risk, as well as vault security and governance risk.
S&P said that these assessments will measure the loss risks faced by investors in lending funds, but they do not constitute credit ratings, nor will they evaluate yields. S&P Global Ratings analyst Lisa Schroeer stated that the framework is not intended to determine whether any one of the six types of risks is greater than the others.
Schroeer said to Cointelegraph: "Any significant weakness in any one factor could limit the overall treasury risk assessment ( VRA ) outcome. A strong score in one factor cannot offset a significant weakness in another factor." She noted that this approach reflects a characteristic of the industry: "There are many potential risk points that could cause problems or fail."
The digital asset lending treasury will aggregate investors' deposits and deploy them through preset strategies managed by smart contracts or human curators. Depositors will receive tokens that represent their share of the assets in the treasury and the corresponding returns.
S&P said that as of September, the deposit size in digital asset lending vaults was approximately $10 billion, up from $1.5 billion two years ago. S&P indicated that it plans to release the first batch of vault risk assessments in future announcements, but did not specify which vaults would be assessed first.
When explaining the potential role of this framework for investors, Schroeer stated: 'This assessment is aimed at increasing risk transparency, thereby enabling any entity to make more informed decisions when deciding how to allocate capital to the DeFi treasury.'
The expansion of encrypted vaults also brings more scrutiny to the associated risks.
Over the past year, as exchanges, wallets, and the DeFi platform have launched products that package lending and other revenue strategies for users, the crypto vault has continued to expand.
In February this year, Wallet, in, and Telegram launched their self-managed BTC, ETH, and USDT vaults, utilizing the infrastructure provided by Morpho, TAC, and Re7. Subsequently, in May, Kraken introduced a Bitcoin yield vault, which was supported by Veda and managed strategically by Sentora. Within the first 10 hours of its launch, it attracted $30 million in funds from 4,000 wallets.
Thereafter, this model has been extended to tokenized securities. In September, Kraken launched tokenized versions of income funds for NVIDIA, SPDR S&P 500, ETF, as well as Invesco QQQ ETF. The related strategies are managed by Sentora, and these assets are lent through the DeFi market.
Currently, encrypted vaults in the United States are still in a regulatory grey area. In July, Commissioner Hester Peirce of the U.S. Securities and Exchange Commission (SEC) stated that some vaults and on-chain lending products may fall under the jurisdiction of federal securities laws, depending on their structure and mode of operation.
Peirce indicates that if a vault involves discretionary decisions regarding asset allocation, investment strategies, lending terms, or liquidation thresholds, it may trigger regulatory requirements regarding securities, investment companies, or investment advisors.
