a16z Open Letter to the U.S. Government: Cryptographic Networks Can Fix Existing Systems—Don't Let Policy Failures Sacrifice Our Future
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a16z Open Letter to the U.S. Government: Cryptographic Networks Can Fix Existing Systems—Don't Let Policy Failures Sacrifice Our Future
In an increasingly internet world controlled by a few, decentralized networks offer a credible path forward.
Navigating Web3 tides with focused insightsThe U.S. government is seeking to increase revenue through cryptocurrency taxation. A new bipartisan $1.2 trillion infrastructure bill in Congress aims to raise approximately $28 billion from cryptocurrency tax enforcement measures as one of its funding mechanisms. Under these tax enforcement provisions, the Internal Revenue Service (IRS) would require digital asset-related entities to report any transactions involving digital assets.
On August 4, in response to this proposal, prominent Silicon Valley venture capital firm Andreessen Horowitz (a16z) released an open letter calling for amendments to the bill. a16z stated, decentralized crypto networks offer the United States an extraordinary opportunity, and we must not sacrifice tomorrow’s economic potential due to a flawed bill.
Full text of the open letter:
Dear Majority Leader Schumer and Minority Leader McConnell,
We are writing to express our support for the bipartisan amendment to the infrastructure bill proposed by Senators Wyden, Lummis, and Toomey.
Like the senators, we are deeply concerned that the current provisions on cryptocurrency transaction reporting are overly broad and would sweep in non-intermediary actors such as network validators and software developers, stifling innovation by imposing unworkable reporting obligations on these groups. The infrastructure bill is too important to be vulnerable to legal challenges based on the current text. This bipartisan amendment represents the right solution to address these issues clearly and effectively.
As leaders of one of the largest cryptocurrency-focused venture funds, we are encouraged that the government recognizes the growing significance of this emerging industry.
Cryptocurrencies and blockchains hold vast untapped potential for diverse groups—from musicians, artists, and other creators to small business owners and the financially underserved.
An appropriate regulatory approach must reflect a critical reality: cryptocurrency is not a monolithic concept. The scope of the crypto ecosystem extends far beyond its financial origins, encompassing digital art, community development, and new models for organizing society.
As an entirely new economy emerges atop decentralized protocols—just as the internet was built upon protocols like TCP/IP—regulation must reflect the nuance that different uses of crypto will require different rules.
Decentralized crypto networks present the United States with an extraordinary opportunity: to foster open systems and societies rather than closed ones, to drive economic growth, and to create jobs.
If this bill passes in its current form without amendment, it will undermine the very goals this infrastructure legislation seeks to achieve. We cannot sacrifice tomorrow’s economic opportunities because of a flawed bill—one that requires only a simple fix.
In an increasingly centralized internet world dominated by a few players, decentralized networks offer a credible path forward. Meanwhile, China has already made a massive bet on centralized government control over the next wave of financial and computing infrastructure. Our nation can offer an alternative: building participatory and inclusive infrastructure that works better for everyone.
We firmly believe that cryptocurrencies will enable society to unlock the full potential of digital transformation and fulfill promises unrealized within our current systems.
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