Source: a16z
Authors: Brian Quintenz, Policy Lead at a16z Crypto, Michele Korver, Regulatory Lead, and Miles Jennings, General Counsel.
We have received numerous inquiries from cryptocurrency founders asking what the recent elections mean for their projects. We told them that we have a rare opportunity to bring the best of cryptocurrency to the world, building on the bipartisan progress of the last Congress.
In the coming months, we expect to hear a range of speculation and "hot takes" on what will happen regarding legislation and regulation—most of which is just noise. In fact, it is still too early to judge how everything will change, but we know it is important for the industry. We are very optimistic that the government will now promote innovation, accelerate progress, and allow the crypto ecosystem to thrive in the U.S.
This will make possible a future in which we can offer many consumer benefits we have been excited about: giving people ownership of their digital identities, providing new business models for creators, enabling low-cost or no-cost cross-border transactions using stablecoins, offering small businesses like restaurants new ways to connect with customers, the emergence of decentralized social networks, the development of physical infrastructure like energy networks, and the democratization of AI and gaming through blockchain, along with many other aspects we can hardly imagine.
The good news is that there is now a pathway for constructive engagement with regulators and legislators, making regulation clearer. You should now feel empowered to explore all the groundbreaking products and services supported by blockchain, including tokens. While we may have greater flexibility to experiment, we must not forget that the fundamental regulatory principles applicable to blockchain systems remain unchanged. This means that "where there is trust, there is regulation" still applies. Therefore, you should continue to focus on eliminating concentration or reliance on trust in your projects, as these areas continue to attract regulatory scrutiny.
Next year, we will advocate for a clear regulatory framework to foster and support innovation and decentralization. This presents both an opportunity and a responsibility for builders—you can actively shape the future by developing projects that demonstrate how decentralized protocols can mitigate risks and validate new regulatory approaches.
This will provide a decentralized pathway for well-meaning entrepreneurs, while protecting consumers by ensuring scams and fraud are detected early.
Regardless of the progress of new legislation or the recalibration of the regulatory environment, regulators and policymakers will still conduct effective scrutiny of certain aspects of the industry. This is especially true for token issuance, where the principle-based guidance in the token launch handbook still applies.
We should expect that in the future, these clear rules will make it easier to identify and shut down bad actors like FTX, while allowing meaningful projects to take off. This will both protect consumers and rebuild trust and confidence in the technology. The previous way of regulating through enforcement was unclear, hindering good actors while allowing bad actors, which actively harmed consumers and unfairly eroded trust in the space.
However, for many who have delayed using tokens to allocate project control and build communities out of concern for overregulation, you should now have greater confidence in using tokens as legitimate tools for your projects. We will also soon release new guidelines regarding decentralized nonprofit associations (DUNA) using projects aimed at making the U.S. a home, shielding token holders from liability, managing tax and compliance needs, and fostering greater economic activity.
The future of cryptocurrency in the U.S. is bright—now is the best time to build here, and we are excited about the possibilities of regulatory clarity.
The views expressed here are solely those of individuals cited by AH Capital Management, L.L.C. ("a16z") and do not reflect the views of a16z or its affiliates. Some of the information contained herein is from third-party sources, including portfolio companies of funds managed by a16z. Although this information comes from sources believed to be reliable, a16z has not independently verified this information and makes no representations regarding the current or lasting accuracy of the information or its appropriateness in any particular circumstance. Additionally, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.
