Andreessen Horowitz (a16z) has no intention of remaining silent as the U.S. Treasury tries to push decentralized stablecoins into traditional financial supervision. A16z crypto (the cryptocurrency wing of the venture capital firm) in a sharp letter to Treasury Secretary Scott Bessent demands clear exemptions for decentralized digital assets from the provisions of the GENIUS Act.
Where is the limit of decentralization?
In its November 4 response to the announcement of the regulations, a16z praises the GENIUS Act as a “monumental step in the development of digital finance,” but at the same time points the finger at a key loophole. The bill introduces a framework for “payment stablecoins” but is silent on the issue of fully decentralized assets.
The company does not mince words – it gives a specific example of LUSD, a stabilcoin secured by Ethereum. This token operates through autonomous smart contracts, without any central controlling entity. A16z argues that since decentralized stablecoins are not issued by a “person” within the meaning of the Act, they should not be subject to the restrictions of “Section 3(a)”, which reserves the issuance of payment stablecoins only to licensed issuers.
Decentralization as protection against overregulation – proposals a16z
It is worth noting that a16z proposes to adopt the control-based framework of the Digital Asset Market Clarity Act of 2025. This mechanism would exclude from the definition of financial intermediaries activities such as transaction validation, running nodes or the development of non-custodial wallets. This is logical – after all, the network validator has no control over users’ funds.
The company also calls for equal opportunities for all stablecoin issuers and modernization of AML/KYC regulations. Objective? Fighting money laundering without stifling innovation, something the industry has been fighting for for years.
Digital identity as a remedy
Michele Korver, head of regulatory affairs at a16z crypto, goes a step further. In response to FinCEN’s call for innovative solutions against illicit finance, the company is focusing on a decentralized digital identity.
Technologies such as zero-knowledge proofs and multi-party computation are intended to enable identity verification without revealing sensitive data. According to Korver, it’s a double victory: strengthening national security while protecting civil liberties. Korver emphasizes that reusable digital credentials can reduce costs for institutions and better detect fraud.
The battle for the future of stablecoins is just beginning, and a16z is clearly demonstrating that it will not allow decentralization to be strangled in its regulatory stranglehold.
