In its response, the venture firm argued that the draft’s treatment of “ancillary assets” would blur the line between securities and commodities, creating gaps that benefit insiders while weakening retail safeguards. A16z instead favors the “digital commodity” model outlined in the earlier CLARITY Act, paired with clear rules for when tokens can be considered decentralized.
The firm also urged lawmakers not to tamper with the Howey test—the decades-old legal standard for defining securities—warning that rewriting it would destabilize securities law. Rather than scrapping Howey, they suggest adapting it to evaluate whether any single entity still exerts control over a blockchain network.
Beyond definitions, the letter raised a broader concern: that treating core blockchain functions such as mining, staking, or running consensus as financial activities could choke innovation. These functions, a16z said, should be seen as infrastructure, not regulated services.
At the heart of its argument, the firm cautioned that poorly drawn rules could open loopholes for insider sales and erode investor trust. The message to lawmakers was clear—tighten protections, don’t water them down.
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