S&P Global Launches Risk Assessments for Crypto Lending Vaults as Deposits Reach $10 Billion

S&P Global Ratings has introduced a risk assessment framework for digital asset lending vaults, the onchain products that pool investor deposits and run them through set strategies managed by smart contracts or human curators. It looks at six areas: portfolio credit quality, liquidity mismatch, curator risk, blockchain risk, protocol risk, and vault security and governance. These assessments will gauge the risk of investor losses but will not be credit ratings and will not judge yields. S&P has not said which vaults will be assessed first.

How the Vault Risk Assessment Works

S&P analyst Lisa Schroeer says no single category is treated as riskier than the rest. A serious weakness in any one factor can hold back the overall score, and a strong result in one area cannot make up for it, because the sector has many points where things can break. She says the aim is to give investors more transparency when deciding where to put capital in DeFi vaults.

Crypto Vault Growth and Exchange Products

Deposits in lending vaults hit about $10 billion in September, up from $1.5 billion two years earlier. Wallet in Telegram launched self-custodial vaults in February, and Kraken’s Bitcoin yield vault drew $30 million from 4,000 wallets in its first 10 hours in May. In September, Kraken added yield vaults for tokenized Nvidia, SPDR S&P 500 and Invesco QQQ products.

Crypto Vault Risks and SEC Regulation

Term Finance lost an estimated $8.5 million in August after an attacker took over governance control of its Meta Vaults. In the US, vaults sit in a gray area. SEC Commissioner Hester Peirce said in July that some could fall under securities laws, especially where discretionary choices over allocation, yield strategies, lending terms or liquidation thresholds are involved.