Andreessen Horowitz (a16z) has advocated for amendments to draft cryptocurrency legislation, specifically targeting regulatory gaps affecting Ethereum and other decentralized networks. The venture capital firm contends that the proposed ‘ancillary asset’ classification would undermine investor safeguards and create conflicts with established securities law foundations like the Howey test.
In formal recommendations, a16z endorsed the CLARITY Act’s ‘digital commodity’ framework as a solution to reduce regulatory ambiguity. The firm further proposed a control-based decentralization evaluation model, where regulatory treatment would hinge on whether any single entity retains operational control over a crypto asset’s ecosystem.
Significant concern was raised regarding provisions dividing securities law application between primary transactions and secondary market resales. a16z warned this loophole could enable insiders to sell tokens without adequate disclosures, potentially harming retail investors. The recommendation emphasizes that core blockchain protocol functionality should be distinctly separated from securities regulation to prevent overreach against developers and network participants.
The proposed control-based framework seeks to provide clearer guidelines for applying securities law analyses while preserving the fundamental characteristics of decentralized systems. This approach reflects a16z’s ongoing advocacy for regulations that both protect investors and foster blockchain innovation.