Catenaa, Monday, August 04, 2025- Venture capital firm Andreessen Horowitz (a16z) has called on US lawmakers to revise the draft crypto regulation bill, warning it could create legal loopholes and weaken investor protections.
The firm sent a formal letter Thursday to the Senate Banking Committee expressing concerns about the 21st Century Financial Innovation and Technology Act, known as the CLARITY Act.
a16z criticized the bill’s treatment of “ancillary assets”, digital tokens sold alongside investment contracts without equity, dividends, or governance rights, arguing that the proposed framework contradicts the long-established Howey test used to define securities.
The firm warned that rewriting the Howey test would undermine settled law and reduce investor safeguards.
Instead, a16z supports defining “digital commodities” with a control-based decentralization model that measures whether any party retains control over a blockchain system.
The firm argues that true decentralization should mark when an asset transitions from a security to a commodity.
The firm also opposed the bill’s differentiation between primary and secondary markets, saying the latter’s regulation under commodity law could allow insiders to resell tokens without oversight.
a16z recommends imposing transfer restrictions until projects achieve full decentralization, preserving investor protections during early stages.
Additionally, a16z criticized the SEC’s past use of the Howey test, stating it has discouraged transparency and innovation by forcing developers to distance themselves from projects to avoid legal risks.
