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A16z Recommends US Regulate Crypto With Decentralization in Mind
The venture capital firm makes four proposals to Congress.
Updated May 11, 2023, 4:48 p.m. Published Oct 6, 2021, 8:58 p.m.
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Venture capital firm Andreessen Horowitz (a16z) has suggested four areas where the U.S. government can govern cryptocurrency and blockchain technology.
The firm outlined Tuesday what it sees as key issues in the decentralized finance (DeFi) sector, including consumer protections, decentralized autonomous organizations (DAOs), regulatory fragmentation and overlap as well as tax reporting, and clarity regarding certain blockchain ecosystems.
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“Each of our four proposals is designed to stand on its own, but taken together, they represent the start to a comprehensive approach to supervision, oversight and taxation in a decentralized environment,” the firm said.
Specifically, a16z’s consumer protections proposal, filed in response to a call from U.S. Sen. Pat Toomey (R-Pa.) of the Senate Banking Committee, recommended creating a simple disclosure-based supervision regime under the Consumer Financial Protection Act. DAOs, meanwhile, are to be given similar legal rights to those of a standard incorporated entity, including tax requirements and being allowed to open bank accounts and sign legal agreements.
The firm suggested three ways to shore up regulatory fragmentation and overlap. Those included harmonizing areas of jurisdiction among agencies, establishing an industry self-regulatory organization and setting up a nonprofit for technical oversight. In its fourth proposal, a16z reiterated the comments it made in August about the U.S. infrastructure bill that is pending in Congress.
“The United States tax and regulatory environments are designed for centralized operations. Yet, as currently drafted, the infrastructure bill pending in Congress would impose tax reporting requirements on a wide array of actors who would have no ability to comply,” the firm said.
In August, Toomey, the Senate Banking Committee’s ranking member, issued a request for feedback in a bid to solicit ideas and legislative proposals on the best regulatory approaches to crypto and blockchain. Proposals were submitted from Aug. 26 through to Sept. 27.
Read more: A16z Details Its New Approach to Crypto Governance
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