A16z is calling on the U.S. Treasury Department to exclude decentralized stablecoins from the scope of the GENIUS Act.

A16z crypto has written to U.S. Treasury Secretary Scott Bessent, urging the Treasury to clarify key definitions in its implementation rules for stablecoin regulation and recommending that decentralized stablecoins be excluded from the scope of the GENIUS Act to promote innovation. This act, passed earlier this year, establishes a regulatory framework for "payment stablecoins," aiming to balance consumer protection, financial stability, and prevention of illicit financial flows. In its letter, a16z points out that decentralized stablecoins like Ethereum-backed LUSD are issued through autonomous smart contracts and are not controlled by a centralized entity; therefore, they "should not be considered as issued by any 'individual'" and should not be subject to Section 3(a) restrictions on licensed issuers. a16z suggests that the Treasury refer to the "control"-based decentralized determination framework in the 2025 Digital Asset Markets Clarity Act to exclude activities such as node operation, transaction verification, and the development of non-custodial wallets from intermediary regulation. Furthermore, a16z calls for a level playing field and the modernization of anti-money laundering (AML) and KYC rules to prevent risks while avoiding stifling innovation. Michele Korver, head of regulation at a16z, added that decentralized digital identities (DIDs), combining zero-knowledge proofs and multi-party computation, can strengthen national security while protecting privacy, helping to combat fraud and illicit transactions. (The Block)