Venture capital firm Andreessen Horowitz (a16z) urges US lawmakers to amend a draft crypto regulation bill to close potential loopholes that could undermine investor protections. In an open letter to the US Senate Banking Committee, a16z highlights concerns regarding the definition of ancillary assets, which are tokens sold alongside investment contracts without equity or governance rights. The firm argues that the current draft fails to address critical issues in crypto markets and suggests adopting a narrower 'digital commodity' framework from the CLARITY Act to provide clearer regulations. Additionally, a16z insists on maintaining the current form of the Howey test, warning against proposed changes that would weaken investor protections. To mitigate insider trading risks, a16z proposes requiring projects to decentralize fully before selling their tokens. They emphasize that the technology behind cryptocurrencies, such as consensus algorithms and smart contracts, should not be categorized as regulated financial activities. Overall, a16z seeks enhanced clarity and stronger safeguards in crypto legislation to protect investors.

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