DeFi will ultimately triumph! SEC ends four-year investigation into Aave, causing AAVE tokens to rise?

The U.S. Securities and Exchange Commission (SEC) has officially concluded its four-year investigation into the DeFi lending protocol Aave, and will not pursue enforcement action against the protocol. Aave founder and CEO Stani Kulechov confirmed this news on social media.

“In recent years, DeFi has faced unfair regulatory pressure,” Kulechov said. “We are pleased to put all of this behind us and enter a new era where developers can truly build the financial future.”

01 Investigation Overview

After nearly four years of tug-of-war, the SEC’s investigation into the Aave protocol has officially come to an end. According to information disclosed by Aave CEO Stani Kulechov on social media, the SEC has decided not to recommend enforcement action against Aave.

On December 16, 2025, Kulechov posted a screenshot of an SEC letter dated August 15. The letter explicitly states that the agency staff plans not to recommend enforcement action against Aave.

A spokesperson for Aave Labs stated, “This is the first time Aave Labs has announced this outcome. The multi-year review involved ongoing regulatory engagement and has now officially concluded.”

Typically, the SEC does not comment on whether an investigation exists. The proactive disclosure of the investigation’s conclusion by Aave is seen as a clear progress in the DeFi sector’s dialogue with regulators.

02 Regulatory Shift

The end of the Aave investigation is not an isolated event; it occurs against the backdrop of a subtle shift in the SEC’s attitude toward digital asset regulation.

Earlier this month, DeFi project Ondo Finance also announced that the SEC had ended its investigation into them. This continuity suggests that regulators may be re-evaluating their strategies targeting the cryptocurrency space, especially DeFi.

Recent updates within the SEC include actions related to crypto assets, such as withdrawing certain enforcement actions against crypto companies, establishing a dedicated cryptocurrency task force, and launching “Project Crypto,” focused on on-chain activities, to update its rules.

For leading DeFi protocols like Aave, the conclusion of the investigation removes a significant uncertainty. Kulechov emphasized that the team and founders have invested substantial effort and resources to protect Aave, its ecosystem, and the broader DeFi space.

03 Market and Data Reactions

Buoyed by positive regulatory news, the market performance of the AAVE token has attracted attention. According to industry data, as of December 17, the real-time price of AAVE is approximately $200.86.

Market data shows that AAVE’s trading volume over the past 24 hours is about $344 million. Its current circulating supply is 16 million tokens, with a fully diluted market cap of approximately $3.1 billion.

Compared to the price fluctuations over the past week, the current price has increased by about 26.02% from the 7-day low of $182.35. This performance may partly reflect market optimism about the easing of regulatory risks.

04 Aave’s Development Roadmap

With the cloud of regulation lifting, Aave can focus more on protocol development and innovation. CEO Stani Kulechov has high expectations for the upcoming Aave V4 upgrade.

This upgrade is expected to be one of the major events in DeFi in 2025, introducing new features such as a hub-and-spoke architecture and re-investment modules. The re-investment module, a later addition, allows the protocol to deploy idle liquidity from pools into low-risk, high-liquidity yield strategies.

In addition to technical upgrades, Aave is actively expanding its business. In late October 2025, Aave announced a strategic partnership with on-chain asset management firm Maple Finance, aiming to bring institutional-grade assets into its DeFi lending market.

This collaboration will integrate Maple’s yield-bearing stablecoins (such as syrupUSDT and syrupUSDC) into Aave’s lending markets, attempting to stabilize borrowing demand and improve capital efficiency.

05 Proof of DeFi Resilience

Aave’s performance under extreme market conditions has demonstrated the resilience of DeFi protocols. During the market crash on October 10, 2025, when many centralized exchanges experienced outages, Aave automatically liquidated over $200 million worth of collateral, maintaining solvency without interruption.

“Considering the protocol’s current scale, that’s impressive. But the outcome is good. DeFi has truly proven itself,” Kulechov said when reflecting on this stress test.

This model of risk management through smart contracts, which automatically executes liquidations, is a key difference between DeFi and traditional finance. The liquidation mechanism, as the core method for maintaining solvency during market turbulence, allowed Aave to navigate extreme volatility smoothly.

06 Macro Opportunities and Challenges

Standing at a new starting point, Aave and its founders are looking toward broader macro opportunities. Kulechov foresees that a potential rate-cutting cycle by central banks could become the next catalyst for DeFi.

“I’m very eager for central banks’ interest rates to fall. Historically, such situations have accelerated financial innovation,” he said. A rate cut could create significant arbitrage opportunities between traditional finance and DeFi.

When policy interest rates decline, the interest spread between on-chain funds and traditional finance often widens, creating conditions for basis trading that supported lending during previous easing cycles.

If DeFi can maintain its safety and transparency, it could attract more traditional participants (such as new banks and fintech companies) seeking yields.

Kulechov also recently expressed appreciation for the UK’s HM Revenue & Customs’ proposed tax policy on DeFi lending and staking, which aims for “no yield, no loss” taxation.

He considers this a major victory for UK DeFi users, especially those interested in borrowing stablecoins against crypto collateral.

07 Future Outlook

With the SEC investigation concluded, Aave and the entire DeFi industry appear to be at a critical turning point. The gradual clarification of regulation clears an important obstacle for protocol development and innovation.

The launch of Aave V4 will further solidify its leading position in the DeFi lending market. Collaborations with institutions like Maple Finance also indicate that the integration of DeFi with traditional finance will deepen and expand.

For investors, a reduced regulatory risk, ongoing technological upgrades, and expanding business activities could strengthen the long-term value of the AAVE token. The AAVE token not only plays a central role in protocol governance but also provides rewards to holders through staking in the security module.

On mainstream trading platforms like Gate, AAVE has long been a key trading asset in the DeFi sector. As the regulatory environment improves and the protocol’s fundamentals strengthen, AAVE’s market appeal is expected to further increase.

Future Outlook

As of December 17, the AAVE token’s trading price is approximately $200.86, up over 26% from the 7-day low. With the upcoming Aave V4 upgrade and deeper institutional collaborations, key metrics such as Total Value Locked and revenue composition warrant close attention.

Founder Stani Kulechov’s vision has gone beyond regulatory challenges. He foresees that the shift in global monetary policy could present historic opportunities for DeFi. When traditional financial interest rates decline, transparent, open, and competitive DeFi yields may become magnets for attracting the next wave of large-scale capital inflows.