Building Vaults Institutions Can Underwrite

Originally published 29 October 2026 by Andrea Vianelli, COO, Asset Management and Strategic Advisory at Laser Digital, in Crypto Insights Group's 4Q26 Active Strategy Outlook Magazine ¹

Key takeaways

• Multi-strategy vaults perform the economic function of collective investment schemes, and their curators perform the function of investment managers.
• Most vaults offer institutional technology without institutional safeguards: regulated management, segregated wrappers, investor gating and full disclosure are frequently absent.
• Fifteen criteria define an institutional-grade vault. Allocators should treat them as conditions to invest, and curators as conditions to operate.

Vaults Taxonomy

Vaults have become the main way on-chain capital is put to work, and that growth makes a clear taxonomy necessary before any regulatory assessment.

For the purposes of this analysis, a vault is a smart contract through which users deposit tokens in exchange for vault shares, often referred to as vault receipt tokens, representing a proportional ownership interest in the pool of assets held by the contract.²

The label "vault" covers very different arrangements, however, and the difference lies in how much discretion the curator holds. In a credit vault, the curator's choices are limited to collateral eligibility, loan-to-value parameters and allocation caps within lending markets. In a multi-strategy vault, the curator decides where capital goes across lending, liquidity provision, derivatives, tokenized real-world assets and off-chain managers.

This piece concerns the second category, where curator discretion and investor exposure are greatest.

Where the market falls short

Adoption has outpaced safeguards. Many of these products operate without the protections that asset management takes for granted: authorization requirements, disclosure of strategy and risk, fiduciary duties owed to investors, management of conflicts of interest and independent risk management.

Stream Finance shows the cost. In November 2025 Stream disclosed that an external fund manager had lost about USD 93 million of fund assets, and suspended deposits and withdrawals. The loss originated off-chain, with a manager depositors could not identify, under valuation and reserve arrangements they could not inspect. Every weakness sat where fund regulation concentrates its protections: delegation, valuation, disclosure and conflicts.

Vaults as Funds = Curators as Managers

From an economic standpoint, multi-strategy vaults are functionally analogous to mutual funds or money-market funds: they pool user capital, issue fungible share tokens representing pro-rata claims, employ professional management through curation, rebalance capital allocation, and extract fees from accrued yield.

Whether the curator acts programmatically or through discretionary instructions leaves that substance unchanged. The usual objection holds that the curator merely configures software that executes autonomously. That objection fails on the facts of the role: selecting collateral, setting exposure caps and deciding when to reallocate are investment decisions.

Fifteen criteria for an institutional-grade vault

After more than 18 months studying the sector, Laser Digital has developed its policy view on the minimum standards a vault must meet to be accessible with confidence and trust by institutional allocators. We set out below our non-exhaustive checklist allocators should review prior to on-chain allocation:

Regulated curator. Any third party entrusted with investor assets, whether it manages them programmatically or otherwise, should be authorized as an investment manager or adviser. The case is strongest where yield derives from RWAs or securities, since the curator is then managing exposure to regulated financial instruments.

Segregated legal wrapper. The technology itself should not require a license. Investors should, however, know which legal vehicle receives and deploys their capital, and that vehicle should be insolvency-remote from the curator and/or other vaults.

Published audits. Independent audits of the smart contracts should be completed and published before the vault opens to investors and repeated at regular intervals and on every material upgrade.

Whitelisted access. Only whitelisted investors should gain access, through on-chain controls, ZK solutions or off-chain onboarding. Whitelisting should extend beyond AML/CFT screening to confirm that investors understand the product and its risks.

Full-spectrum transparency. Blockchain makes positions visible. Fees, costs, risks, liquidity restrictions and the discretionary powers reserved to the curator (gates, timelocks, administrative keys, the ability to add strategies) require the same visibility at vault level.

Disclosed risk framework. Investors and vault promoters should require curators to disclose, at least at a high level, the risk framework and investment process governing the strategy: collateral eligibility, concentration and leverage limits, valuation sources and escalation procedures.

Cura in eligendo. Where a curator selects the vault infrastructure as part of its mandate, it should be able to evidence operational due diligence on that technology. As the regulated party in the chain, the curator is the one accountable for poor design choices.

External risk validation. Cybersecurity insurance and risk ratings from institutional providers add a layer of protection against hacks/smart contract risks as well as an independent check on the curator's own assessment and give allocators a common benchmark.

Independent valuation. Price feeds and valuation methods should be disclosed, sourced independently of the curator and able to show losses when they occur. A fixed or "fundamental value" price feed that cannot reflect stress should be disclosed as such and kept out of institutional strategies.

Liquidity and leverage discipline. Redemption terms should match the liquidity of the underlying positions, and any tools for managing liquidity should be disclosed before investors commit. Curators should set and publish limits on concentration, recursive borrowing and collateral nested inside other collateral and should stress-test the strategy against them.

Oversight of delegates and counterparties. Any off-chain part of the strategy should be run by a named, regulated counterparty under an enforceable contract, and investors should be able to see through to the underlying positions.

Key governance. Investors should know who holds administrative and upgrade keys, the signing thresholds that apply, and the timelocks and guardian powers that constrain them. Timelocks should be long enough for investors to exit before a material change takes effect, and someone independent of the curator should oversee how those powers are used.

Conflicts of interest. Curators should identify, manage and disclose conflicts, including fee structures that reward growth in assets or yield, exposure to assets issued by affiliates, and any payment received for listing an asset as collateral or as part of the strategy.

Incident response and wind-down. Before launch, investors should be told who can pause the vault, how losses and bad debt are shared among depositors, and how an orderly wind-down and claims process would run.

Ongoing reporting. Disclosure should continue after launch through periodic reporting on net asset value methodology, changes in exposures, breaches of limits and use of discretionary powers, with material events reported promptly.

What this means for the market

These criteria give each participant a clear course of action. Vaults will carry institutional capital at scale once they offer the protection that capital has always required.

Notes

¹ This contribution builds upon the research work done by Andrea Vianelli, COO, Asset Management, Laser Digital, with Prof. Marco Dell'Erba in a forthcoming contribution on the subject.

² Recently, a first high-level definition was provided by SEC Chair: "Crypto vaults are onchain software applications that are often designed to allow users to earn yield passively through the deployment of their assets into yield-generating opportunities onchain": see Paul S Atkins, 'Remarks at the Special Competitive Studies Project AI+ Expo' (SEC, 8 May 2026) https://www.sec.gov/newsroom/speeches-statements/atkins-remarks-scsp-ai-expo-050826 accessed 27 May 2026.

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