The U.S. Securities and Exchange Commission has concluded its four-year investigation into Aave protocol without taking enforcement action, founder Stani Kulechov announced. The closure removes regulatory uncertainty from one of decentralized finance's largest lending platforms and signals potential clarity for the broader DeFi sector.
AAVE token rose as much as 3% following the announcement before settling 1.1% higher at $185.
What Happened: Investigation Concludes
The SEC launched its probe into Aave in 2021, during a period of heightened regulatory scrutiny of DeFi protocols.
Kulechov said the investigation "demanded significant effort and resources from our team, and from me personally as the founder, to protect Aave, its ecosystem, and DeFi more broadly."
The closure is part of broader regulatory shifts under the Trump administration. According to The New York Times, the SEC has paused or ended 60% of crypto investigations since Jan. 2025.
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Why It Matters: Regulatory Framework
The decision provides a precedent for how regulators may treat decentralized, non-custodial protocols.
Aave's structure—where control is distributed among users and developers rather than centralized—appears to have influenced the outcome.
Aave reached $75 billion in net deposits in 2025, its most successful year. The protocol has processed $3.3 trillion in payments and originated over $1 trillion in loans since launch, placing it alongside the 50 largest U.S. banks by scale, according to Kulechov.
The platform controls 59% of the DeFi lending market and generated $885 million in fees during 2025, representing 52% of all lending protocol revenues.
Kulechov outlined three development priorities for 2026: Aave V4, a protocol upgrade implementing a Hub and Spoke liquidity model; Horizon, targeting real-world asset financing; and Aave App, a mobile interface launched in November designed to drive mainstream adoption.
"Aave cannot scale to trillions of dollars without mass product-level adoption," he said, adding the "DeFi will win."
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