The venture capital company (VC) Andreessen Horowitz (A16Z) and the non-profit research and advocacy organization DEDUCE FUND (DEF) have jointly submitted a key proposal to Securities and Exchange Commission (SEC) to protect developers and innovation.
A16Z, DEFI group partner for cryptographic policies
On Wednesday, A16Z and the DEFI education fund sent a letter to the SEC commissioner, Hester Peirce, urging the regulation agency to exempt the decentralized application (DAPP) and developers of the rules of the broker.
The company VC and the Plaidoyer DEFI group proposed a SAFE port from the recording requirements of the EXCHANGE ACT SECURITIES of 1934 for commercial interfaces that allow users to interact with blockchains and smart contract protocols, including those related to DEFI services and non -fascinable markets (NFT).
Except from a16z and DeFi Education Fund's letter to Commissioner Peirce. Source: a16z crypto
The letter aims to help the Commission to create clear rules to determine which applications are the court of the dry, on the basis of specific criteria and in accordance with similar security ports recently proposed in the legislation on the structure of the federal market.
DEF executive directors, Amanda Tuminelli, said that “developers deserve clarity, and our hope of submitting this proposal is to provide frontal developers with clear rules so that they can build without worrying that they are subject to unreasonable requirements which are ill -aligned with the realities of technology.”
According to the blog post of the DEFI EDUCATION FUND, the joint proposal seeks to be sufficiently flexible to take into account the “constantly evolving nature” of technological development in start -up, while being based on the principle that “most commercial interfaces on the web or on applications (…) are not designed by risks.”
“Only applications that do not generate the risks that the regulatory regime of the broker of the exchange law has been designed to approach should be eligible; In such cases, registration as a broker under the exchange law is unjustified and inappropriate. Conversely, applications that make traditional risks that the broker’s regulations have been designed so as not to be able to take advantage of this safe hacel ”, the readings projected.
Clarity for developers
As the letter explained, applications must meet four objective criteria to qualify for wearing Safe. First, an application must be non -guardian, never taking control of user funds, and it must not exercise discretion on the execution of user transactions. In addition, the application should not actively request or provide investment recommendations and can only display neutral neutral data or market features.
Finally, the underlying protocol must be decentralized, either interfacing with protocols that have eliminated operational control or have demonstrated a “intention in good faith” to decentralize. The proposal also highlighted a limited exception for protocols at an early stage under a certain threshold.
According to the letter, this approach would offer three main advantages, in particular by establishing limits for the application of federal laws and securities to applications which fall under the expansion of the proposed safe and the safeguard of developers DEFI to be subject to “the retroactive application of federal laws on securities”.
In addition, the proposal aligns with the Historical PRO practices concerning the safety ports of the recording of the broker and “complies with the historical lack of prohibition on people engaged in private transactions of peers and the recent dictum of Commissioner Peirce.”
As indicated by Bitcoinist, the SEC Commissioner recently called for the protection of privacy rights and Defi developments. Peirce said that the American authorities are expected to accommodate confidentiality protection technologies and protect the law of individuals from self-handling their digital assets.
We must not ask peers to try each other with each other, where no intermediary exists, collecting and bringing information on each other. This would depict us to monitor our neighbors – an antithetic practice to a free society. Nor should we demand that an intermediary are walking in the middle of peer transactions.
Peirce’s remarks followed the official revocation in July of a controversial cryptography rule which would have forced decentralized exchanges to comply with the broker’s declaration obligations. In particular, the American Treasury Department and the Internal Revenue Service (IRS) officially abandoned the regulations, which was to take full effect in 2027.
The rule, initially proposed in November 2021 through the investment law and infrastructure jobs, aimed to fill the tax gap by widening the definition of “brokers” to include crypto exchanges and other intermediaries, while requiring DEFI platforms to report the product of digital asset transactions and detailed information on user transactions, including names and addresses.
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