A16z Crypto has written a letter to the UK Treasury, warning against adopting a “one-size-fits-all” approach to crypto regulation based on the Howey Test.
A16z Crypto: The United Kingdom Must Take a Nuanced Approach to Crypto Policy The United States needs to catch up in digital asset policy. Industry players hope the United Kingdom will not follow suit and hinder crypto innovation.
This is the message from Andreessen Horowitz (a16z), a leading Web3 investor. The firm fears the US is applying a rigid and outdated framework to crypto, risking harm to digital asset businesses.
A16z Crypto wrote to the UK Treasury, warning against a “one-size-fits-all” regulation for crypto. The firm said a nuanced approach that considers the risks of each crypto asset type is essential for balancing consumer protection and innovation.
Imposing restrictions on Web3 projects could stifle innovation in the UK’s crypto industry as the nation strives to become a Web3 powerhouse. The letter responded to the UK government’s call for consultation on crypto policy, issued on February 1.
A16z pointed out flaws in the US approach to crypto regulation and said: “The US approach is not one that the UK should consider adopting.” A16z Crypto head of policy Brian Quintenz shared his thoughts on Twitter.
According to a16z, the US Securities and Exchange Commission’s inconsistent use of the Howey Test creates confusion and uncertainty in the industry.
As a result, the firm called the Howey Test “impractical to apply.” Moreover, the firm said, “bad actors have taken advantage of these uncertainties and the lack of uniform enforcement to harm consumers.”
The letter also recommended that the UK enable Web3 companies to decentralize within a reasonable regulatory framework. That means allowing them to distribute and trade crypto assets without excessive hurdles.
Polygon Labs responded on Monday, stressing the importance of differentiating between backed and unbacked crypto-assets. Some like Bitcoin and Ether, derive value from their blockchain network role.
This was an intentional design decision. However, other unbacked crypto assets may offer users discounts or exclusive access without serving a fundamental purpose in the blockchain ecosystem.
Based on this assumption, Polygon claimed regulators should focus on crypto-asset-related activity.
