Andreessen Horowitz, also known as a16z, has urged regulators in the UK to adopt a more nuanced approach towards crypto regulations. In a response letter to the UK Treasury’s Future Financial Services Regulatory Regime for Cryptoassets consultation, the venture capital firm argued that regulators must distinguish between risky centralized crypto systems and less risky decentralized systems. The firm called for the principle of “same risk, same regulatory outcome” to guide the writing of new rules, rather than a “one-size-fits-all” approach.
The response letter also highlighted the importance of decentralization in the Web3 world and argued that decentralized projects should be preferred by both consumers and regulators. While some cryptoassets may depend entirely on the managerial efforts of a small group of individuals, others may depend entirely on market forces and user demand for the asset’s underlying protocol. Therefore, the firm argued that strong consumer and investor protection may be less necessary in the latter case.
A16z stressed that it is critical that new regulations do not result in unnecessary impediments to crypto projects that are trying to decentralize their operations, as this could hinder the UK’s vision to become a hub for Web3. The venture capital firm summarized its 27-page letter in a Twitter thread by its Head of Policy, Brian Quintenz, who emphasized the difference between centralized and decentralized projects. Quintenz argued that any regulatory framework must reflect this difference and allow for protocols to achieve decentralization through free token distributions or for conducting network-securing activity.
Ultimately, it will be decentralized systems that allow people to truly own the value of their network contributions, Quintenz said. A16z’s call for more nuanced crypto regulations comes as governments around the world are grappling with how to regulate the fast-evolving crypto industry.