ANALYSIS: This Is 40—DeFi, Crypto Lending, and the 40 Act

The Investment Company Act of 1940, often shortened to the 40 Act, is among the last federal laws that anyone would consider relevant to cryptocurrencies—but that might soon change.

The 40 Act regulates “investment companies,” primarily mutual funds, which are of great importance to the savings and investments of millions of Americans, but are usually far from the frontiers of financial technology. Decentralized finance (DeFi) and crypto lending may change the 40 Act’s afterthought status in the crypto space, however, since these growing and increasingly controversial financial services can emulate features of mutual funds.

The 40 Act: A Footnote ...