Morpho co-founder and CEO Paul Frambot posted a claim advocating that on-chain vaults be categorized as “non-custodial” and “self-discretionary.” In the former, even if the manager is attacked, goes missing, or performs malicious operations, users can still exit on their own within a reasonable time. In the latter, managers are granted greater asset-allocation and strategy-adjustment discretion. Frambot classifies Morpho Vaults as belonging to the former, citing time locks, guardians, permission controls, physical redemption, and immutable contracts as evidence. Aave founder Stani Kulechov later rebutted that this distinction is too permissive and self-serving, arguing that only vaults without managers and that mainly rely on preset rules are closer to true non-custody. Lawyer Gabriel Shapiro and representatives from projects such as Veda and Glider also questioned that time locks, role-based permissions, and on-chain transparency are more security mechanisms and do not eliminate the manager’s substantive control over risk parameters and asset allocation.

SEC Commissioner Hester Peirce previously noted that the management model of on-chain treasuries ranges from being driven entirely by immutable smart contracts to being determined by individuals or teams who independently decide how assets are allocated; some management practices may involve issues related to investment adviser regulation. (The Defiant)