On October 5, well-known venture capital firm Andreessen Horowitz (a16z) submitted four proposals to the US Senate to regulate cryptocurrency and blockchain technology.
The proposals came in response to a request from the US Senate Banking Committee, which is looking to establish a simple disclosure-based supervision regime under the Consumer Financial Protection Act.
In August, Pat Toomey, a senior member of the US Senate Banking Committee, issued a request for feedback to solicit ideas and legislative suggestions on the best regulatory methods for encryption and blockchain.
In response, a16z has proposed four legislative policies on key areas: consumer protection, Decentralized Autonomous Organizations (DAOs), reducing decentralized/overlapping supervision, and lastly, tax reporting.
A16z’s blog post, while summarizing the four legislative proposals, read:
“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.”
On consumer protection, the venture firm proposed an easy-to-understand encryption regulatory system based on information disclosure following the US Consumer Financial Protection Act.
On DAOs, a16z has akin them to standard registered entities and proposed a regulation that requires DAO to be given legal rights such as “filing and paying taxes, opening bank accounts, signing legal agreements, and limiting liability for DAO members”.
The company went on to suggest a reduction in the decentralized or overlapping supervision by proposing three methods including, jurisdictional harmonization, establishing an industry self-regulatory organization, and establishment of a nonprofit corporation for technical oversight.
Lastly, a16z reiterated the relevant comments made in August on the US infrastructure bill pending in Congress that imposed tax reporting requirements on those who cannot comply with these rules.