VC Firm Andreessen Horowitz Flags Gaps in Draft Crypto Bill

Key Points

1. a16z argues that the draft crypto bill's framework for 'ancillary assets' contradicts the Howey test, which is a key legal standard for determining securities.

2. The firm supports the CLARITY Act’s narrower definition of digital assets, emphasizing financial or governance rights over a blockchain system.

3. a16z proposes that decentralization milestones be required before exemptions apply to ensure investor protections remain intact.

4. The letter addresses the SEC’s past application of the Howey test, particularly its focus on the 'efforts of others' aspect.

5. a16z suggests transfer limits should remain until full decentralization is achieved to maintain trust dependencies similar to traditional assets.