MiCA-authorised Tesseract Investment Oy unveils individually segregated on-chain yield vaults, replacing the pooled structures that have kept institutional capital on the sidelines.
Tesseract Investment Oy, a Helsinki-based crypto-asset service provider authorised under the EU's Markets in Crypto-Assets Regulation (MiCA), has launched Tesseract Dedicated Client Vaults: individually segregated on-chain yield vaults built for institutional and professional investors. The product, announced in late March and showcased by CEO James Harris at Vault Summit in Cannes on April 1, represents a direct challenge to the pooled vault model that dominates DeFi today.
On-chain yield vaults have grown into a multi-billion dollar product category over the past two years. Protocols like Morpho, Yearn, and others offer automated strategies that deploy user capital across lending markets and liquidity pools. Yet for all their growth, these vaults share a structural characteristic that creates serious problems for regulated capital: they pool client assets into a single contract, manage them collectively, and distribute returns across all participants. Under European regulation, that combination looks uncomfortably close to an unregulated collective investment scheme.
Tesseract's answer is to eliminate the pooled structure entirely. Each Dedicated Client Vault is a distinct smart contract assigned to a single client, managed under an individual discretionary mandate. Client assets are never co-mingled. The vaults are available at tesseract.fi/vaults, and the firm is already running pilot programmes with institutional partners including 21Shares, one of the world's largest crypto exchange-traded product issuers.
Why Pooled Vaults Create a Regulatory Minefield
The core issue with existing vault architectures is straightforward but difficult to resolve. When a vault pools capital from multiple investors, applies a shared strategy, and distributes proportional returns, regulators in most jurisdictions can reasonably classify the resulting vault token as a security or a unit in a collective investment scheme. Under MiCA, this classification carries significant consequences: it means the product may require a prospectus, UCITS or AIFMD authorisation, and compliance with investor protection rules that most vault operators have not been designed to meet.
This is not a theoretical concern. Established vault curators, including firms like Steakhouse and Gauntlet building on Morpho's infrastructure, operate pooled models where yield-bearing vault tokens could be treated as unlicensed securities under European rules. For institutional allocators, custodians, and regulated platforms looking to access DeFi yield, this creates an impasse: the yield is attractive, but the legal structure surrounding it is not fit for purpose.
"Our clients were telling us for the longest time, 'Look, listen, we appreciate the yield that you can get us. But given the user experience of vaults, we find that it's kind of quaint,'" Harris told The Block in an interview. The comment reflects a broader frustration among institutional participants who see the opportunity in DeFi lending and liquidity provision but cannot reconcile the available structures with their compliance requirements.
How Tesseract's One-Vault-Per-Client Architecture Works
Tesseract Dedicated Client Vaults are built on IPOR Fusion's Plasma Vault architecture, an ERC-4626 compliant smart contract framework developed by IPOR Labs AG in Zug, Switzerland. Each vault operates as an isolated contract with deterministic risk enforcement, embedded compliance parameters, and on-chain portfolio calculation. The architecture uses composable protocol connectors (called Fuses) that integrate with leading DeFi venues, allowing each vault to interact with whitelisted protocols according to pre-agreed mandates.
The client experience differs fundamentally from a pooled vault. Each investor spins up their own vault using their wallet, maintaining 100% ownership of their vault token supply throughout. Tesseract acts as curator with permissions to execute investments on the client's behalf, but the governance, fees, and investment policies are set at inception in collaboration with the client. The vault's smart contract is then hard-coded to interact only with the mandates and parameters agreed upon at the outset.
"Ultimately, when you compete with vaults, vaults are real-time positioning that are effectively intrinsically linked to your wallet. You can't compete with that as a user experience," Harris told The Block. The implication is clear: rather than trying to replicate pooled vault simplicity, Tesseract has leaned into the structural advantages that individual segregation provides. At launch, the firm is targeting strategies involving wrapped bitcoin, ether, and stablecoins, ranging from basic yield optimisation to specific asset looping strategies via sub-vaults.
From Yield-as-a-Service to Vault Infrastructure
Tesseract's pivot to dedicated vaults builds on an established track record in institutional DeFi. Founded in 2017, the firm manages over $500 million in assets and has originated more than $1 billion in loans through its borrow-lend platform. It launched its yield platform in 2022 and counts Bitstamp (now owned by Robinhood) among its clients for yield-as-a-service products. The firm raised $25 million in a Series A round in 2021 and holds a full MiCA CASP licence from Finland's Financial Supervisory Authority.
The choice of IPOR Fusion as the underlying infrastructure reflects Tesseract's emphasis on battle-tested technology. IPOR Labs spent over a year collaborating with Tesseract to pressure-test every layer of the Plasma Vault stack before the product went live. "IPOR Fusion was designed to meet the needs of institutional capital operating on-chain strategies with the same structural safeguards they expect in the traditional world," IPOR Labs CEO Darren Camas said in a statement accompanying the launch.
Harris presented the vault architecture at Vault Summit in Cannes on April 1, 2026, in a session titled "What the Next Wave of Institutional Capital Needs From Vaults." The presentation outlined Tesseract's thesis that the next phase of institutional DeFi adoption will be driven not by higher yields but by better structures, specifically ones that satisfy European regulators without sacrificing the transparency and composability that make on-chain finance attractive in the first place.
The ETP Opportunity and Pilot Partners
Among Tesseract's early pilot partners, 21Shares illustrates the commercial logic most clearly. Crypto exchange-traded products currently offer investors staking returns, a relatively narrow yield source. Dedicated Client Vaults could allow ETP issuers to access non-staking DeFi returns within a regulated wrapper, potentially broadening the yield profile available to their end investors. "The ETP use case is a very, very interesting one because effectively at the moment, ETPs provide staking returns. And of course, it would be wonderful to add returns that are non-staking based that can be achieved across DeFi," Harris told The Block. "The risks are different, but you can have a different profile."
Tesseract tested its vault infrastructure with six pilot participants before the public launch, and additional partners across asset management, custody, and institutional distribution are expected to be announced in the coming months. The firm will charge management and performance fees on vault strategies, aligning its revenue model with the discretionary mandate structure rather than the token-based fee models common in permissionless vaults.
Harris was careful to position the product as complementary to, rather than competitive with, the existing permissionless vault ecosystem. "I'm participating in the best way I know how, and I'm trying to make it so that it doesn't break any of the promises and great innovation that we've seen on the decentralized finance side," he told The Block. "We feel that this is additive and that it's the best possible compromise of creating a compliant version whilst not losing the ethos behind it." For institutional capital that has been circling DeFi yield from a distance, Tesseract's individually segregated vaults may represent the structural bridge that finally makes participation viable.
