Andreessen Horowitz Flags Crypto Regulation Loopholes in Draft US Bill

Venture capital giant Andreessen Horowitz (a16z) has raised alarms over potential regulatory gaps in a proposed US cryptocurrency bill. In an open letter to the Senate Banking Committee, the firm argued the current draft—based on the CLARITY Act—could undermine investor protections and introduce unintended market risks.

The legislation's treatment of 'ancillary assets' drew particular scrutiny. These tokens, marketed as investment contracts but lacking equity or governance rights, shouldn't FORM the basis of regulation without significant revisions, a16z contended. The firm also criticized the bill's misalignment with the Howey Test, the longstanding benchmark for determining securities classification.

Market clarity would be better served by adopting the CLARITY Act's narrower digital commodities framework, the letter suggested. Such an approach could preserve the regulatory certainty that has allowed crypto markets to flourish while addressing legitimate oversight concerns.