Andreessen Horowitz Suggests Revising Ethereum Regulation to Address Loopholes in Draft Crypto Legislation

Key Points

1. Andreessen Horowitz opposes the 'ancillary asset' concept in crypto, arguing it could weaken investor protections and conflict with established securities law like the Howey test.

2. The firm supports the CLARITY Act’s 'digital commodity' framework to reduce regulatory uncertainty and proposes a control-based decentralization framework for evaluating crypto assets.

3. A16z warns that the draft bill’s division of securities law for primary transactions and resales could allow insiders to sell without oversight, harming public investors.

4. The firm suggests evaluating crypto assets based on whether any party retains control over the system, which would guide the application of the Howey test and ensure appropriate regulatory treatment.

5. A16z highlights the need to clarify the distinction between core blockchain technology functions and securities to protect developers and users from overregulation.