a16z Demands Clarity: Why the GENIUS Act Can’t Afford Another Regulatory Fog
Silicon Valley's crypto heavyweights are turning up the heat—again.
Andreessen Horowitz (a16z) just fired a shot across Washington's bow, urging 'clear implementation' of the long-debated GENIUS Act. No more vague promises, no more bureaucratic tap-dancing—just rules that don’t require a PhD in legalese to understand.
The subtext? 'We’ve got billions parked in digital assets, and we’re tired of regulators treating crypto like a speculative Wild West.'
Of course, when a VC firm starts lobbying for 'clarity,' savvy investors know to check whose pockets stand to benefit. But hey—at least they’re not asking for another bailout. Yet.
Clarifying stablecoin definitions
a16z emphasized the need to clearly define which stablecoins are covered under the GENIUS Act. Not all stablecoins are considered “payment stablecoins,” and decentralized stablecoins should be treated differently.
The letter noted that decentralized stablecoins do not fall within the GENIUS framework. “They are issued through the automatic and programmatic operations of smart contracts that are not controlled by any person.”
The term “person” in the law, a16z argued, does not apply to decentralized stablecoins. Therefore, only centralized, fiat-backed stablecoins with an actual issuer should be subject to GENIUS rules.
a16z also stressed the need for a level playing field among stablecoin issuers. The suggestion included that foreign and state-level frameworks needed to meet or exceed federal standards to guarantee fair competition while protecting U.S. consumers.
Combating illicit finance
The GENIUS Act also addresses anti-money laundering (AML) and sanctions compliance for payment stablecoins. The letter references a16z’s recommendation to modernize AML/KYC rules using digital identity solutions, including decentralized, privacy-preserving systems.
As a16z noted, “Decentralized digital identity—built with privacy-preserving cryptography—can both strengthen national security and protect civil liberties.” Technologies like zero-knowledge proofs and multi-party computation could allow verification without exposing personal data.
The firm highlighted that all payment stablecoin transactions should remain traceable and auditable. Treasury may provide guidance on how network participants, including validators and custodians, can meet AML obligations without interfering with normal operations.
Tax and accounting considerations
a16z also highlighted that current IRS guidance could create burdensome reporting for routine stablecoin transactions, even when gains or losses are negligible. They suggested rules that reflect real-world usage, exempting minor transactions from taxable events while preserving oversight for significant deviations.
Similarly, Coinbase also submitted a letter which stated payment stablecoins should be treated like cash for tax and accounting purposes since their value stays stable. The exchange urged the Treasury and IRS to adopt a practical, low-burden approach to avoid overwhelming authorities with unnecessary data.
Apart from these two firms, even Circle, recommended clear and uniform guidelines to protect consumers while supporting growth in the stablecoin sector.
Future outlook for stablecoins
How the GENIUS Act is put into practice will greatly affect the U.S. stablecoin market. a16z, among others, has called for a distinction in the treatment of centralized and decentralized stablecoins, with the creation of rules that make sense in the real world.
Clear and fair rules can boost innovation, protect users, and keep competition healthy. However, if the rules are too strict or unclear, adoption, especially of decentralized stablecoins, may slow down, limiting market growth.
Also Read: Brazil Central Bank Tightens Crypto and Stablecoin Rules
