A16z Calls on US Treasury to Exclude Decentralized Stablecoins from GENIUS Act Regulation

A16z crypto has written to US Treasury Secretary Scott Bessent urging the Treasury to clarify key definitions in stablecoin regulation guidelines and to exclude decentralized stablecoins from the scope of the GENIUS Act regulation to promote innovation. The Act, passed earlier this year, established a regulatory framework for 'payment-type stablecoins' to balance consumer protection, financial stability, and prevent illegal fund flows. A16z pointed out in the letter that decentralized stablecoins like LUSD backed by Ethereum collateral are issued through autonomous smart contracts without centralized control, and therefore should not be considered as issued by any 'individual' and should not be subject to restrictions under Section 3(a) regarding licensed issuers. A16z suggested the Treasury refer to the decentralized determination framework based on 'control' in the 2025 Digital Asset Market Clarity Act to exclude node operation, transaction verification, and development of non-custodial wallets from intermediary regulation. Additionally, A16z also called for the establishment of a fair competitive environment, modernization of anti-money laundering (AML) and know-your-customer (KYC) rules to prevent risks while avoiding stifling innovation. A16z regulatory head Michele Korver added that decentralized digital identities (DID) combined with zero-knowledge proofs and multi-party computation technology can enhance national security while protecting privacy, helping to combat fraud and illegal transactions. (The Block)

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