Andreessen Horowitz’s cryptocurrency division, a16z crypto, has urged the US Treasury to clarify key definitions in the new regulations governing “stablecoins”.
In a letter addressed to Treasury Secretary Scott Bessent, the company described the adoption of the GENIUS Act as an “important step for the development of digital assets.” However, the firm called for greater clarity on whether the law applies to decentralized stablecoins.
As an example of such assets, a16z cited LUSD, which allows for interest-free loans collateralized by Ethereum. The coin is issued through autonomous smart contracts without the oversight of a centralized issuer.
“The Treasury should clearly state that because decentralized stablecoins are not issued by a ‘person’ as defined in [the GENIUS Act], they are not subject to the prohibition in Section 3(a),” the letter asserts.
According to the document, Section 3(a) restricts the issuance of payment stablecoins in the US to authorized issuers only.
a16z recommended adopting the approach from the CLARITY Act, which exempts validation operations, node activities, and the development of non-custodial wallets from regulation. The firm believes this would preserve the innovative potential of decentralized finance.
Combating Cyber Fraud
Michelle Korver, head of regulatory affairs at a16z, stated that the company also responded to a request from FinCEN regarding approaches to combating illicit financing in cryptocurrencies.
@a16zcrypto recently submitted responses to the U.S. Department of the Treasury’s first post-GENIUS requests designed to implement the bipartisan and ground-breaking stablecoin legislation. Here are the key points:
On FinCEN’s request for innovative approaches to combat…
— Michele Korver (@MicheleKorver) November 12, 2025
As a solution, the firm proposed:
- modernizing AML/KYC rules;
- implementing decentralized digital identity;
- utilizing technologies based on ZKP and MPC;
- enhancing compliance;
- fostering collaboration between the public and private sectors.
“Decentralized digital identity, created using privacy-preserving cryptography, can simultaneously enhance national security and protect civil liberties,” Korver wrote.
Meanwhile, ZKP and MPC technologies allow for verification without disclosing personal data.
According to the company representative, this approach will reduce the risk of cyberattacks and help institutions combat fraud while lowering operational costs.
Back in April, a16z analysts identified stablecoins as the main driver of cryptocurrency adoption.