Venture capital firm Andreessen Horowitz (a16z) has taken a step towards simplifying the regulation of decentralized finance (DeFi) applications in the United States. Along with the DeFi Education Fund, it has presented a proposal to the SEC.
The Safe Harbor Proposal
On Wednesday, a16z and the DeFi Education Fund submitted a proposal to the SEC that suggests a 'safe harbor' for certain decentralized apps, enabling them to avoid many securities laws and registration risks.
Conditions for DeFi Apps
To qualify for the safe harbor, an app must not:
* hold user funds, * control transactions, * provide investment advice or solicit investments, * and it should operate only on fully decentralized, autonomous, and non-custodial blockchain networks.
a16z points out that most apps are not custodial but passive software tools allowing users to interact with a decentralized network.
Changes in SEC's Stance
As the SEC shifts towards a more crypto-friendly regulation, a16z's proposal initiates a discussion on clearer rules for developers, avoiding outdated laws being applied to modern software. In recent months, the SEC has also explored ways to support self-custody of assets as a foundational right, launching the 'Project Crypto' initiative to encourage innovation in the cryptocurrency space.
The a16z proposal represents a significant step towards creating a safer and clearer regulatory environment for DeFi applications in the U.S., which may foster the growth of this rapidly evolving industry.
