The founders of Andreessen Horowitz (a16z), Ben Horowitz and Marc Andreessen, recently took part in a discussion where they openly criticized the Biden-Harris Administration’s handling of the cryptocurrency industry. They highlighted a series of regulatory challenges that they believe are stifling innovation and growth in the sector. One of the main criticisms was directed at the Securities and Exchange Commission (SEC) for its lack of clear guidance on which cryptocurrencies are considered securities and which are commodities.
The regulatory ambiguity surrounding cryptocurrencies has resulted in the SEC filing lawsuits against more than 30 crypto companies within the a16z portfolio. This aggressive enforcement has been described as unprecedented by Andreessen, noting that neither he nor Horowitz had encountered a single Wells Notice in their over 30-year careers prior to this administration. Even when the SEC loses these cases, the financial and operational strain on startups to defend against the government’s extensive resources is overwhelming, leading to significant challenges for these companies.
The discussion also touched on the Federal Deposit Insurance Corporation (FDIC), which has allegedly made it nearly impossible for crypto companies to secure banking services. Horowitz and Andreessen likened this to “Operation Chokepoint 2.0,” comparing it to earlier efforts that targeted legal cannabis companies, effectively forcing them to operate without access to traditional banking systems. This lack of banking services further hinders the growth and development of crypto startups.
President Biden’s veto of a bipartisan repeal of Staff Accounting Bulletin (SAB) 121, a SEC rule that complicates banks’ ability to hold crypto on behalf of their customers, has also been criticized. This rule makes banks liable for any decrease in the value of the digital assets they manage, posing additional challenges for the industry. Andreessen called this regulation deliberately harmful to the crypto industry, as it prevents banks from engaging with digital assets and limits the industry’s potential for growth.
The co-founders of a16z revealed that their efforts to engage with the administration have been met with resistance. President Biden, SEC Chair Gary Gensler, and Senator Elizabeth Warren have all declined to meet with them to discuss their concerns. This lack of engagement marks a stark contrast to previous administrations, where industry leaders had successfully collaborated with government officials to address regulatory challenges and foster innovation.
In contrast to the Biden-Harris Administration, former President Donald Trump has shown a willingness to engage with crypto leaders and has adopted a supportive stance toward the industry. Trump’s platform includes ambitious goals to build a strong economy, champion innovation, and lead the world in emerging industries, with a particular emphasis on crypto. He opposes the creation of a central bank digital currency (CBDC) and advocates for Americans’ rights to self-custody digital assets and transact without government oversight. Trump has also criticized Biden and Gensler for their handling of the industry and has pledged to change the government’s approach if elected.
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