Here are my notes from Week 5 of a16z Crypto's CSX. This week focused on Decentralization, Governance, and Policy. We also had some fun at Far(away)Con this week!
Talk: Policy and Regulatory Considerations for Web3 Builders
Policy vs. Regulatory
Policy: Goal for laws and regulation in the future
Regulator: Enforcement of the laws and regulations that are here now (i.e. what you need to be aware of and compliant with now)
a16z Crypto Philosophy
Regulation should reflect democratic values
shouldn't: create new powers, censorship
should: support innovative tech, freedom, right to transaction, promote competition
Should be appropriate and clear
Appropriate: What is the scope of the audience intended to address? is it targeting the right risk?
Regulate apps, not protocols
“Don't regulate software; regulate businesses”
Policy issues a16z crypto is focused on
Launching tokens
A regulator path to decentralization
How do we create rules that recommend decentralization as a benefit?
How to think about DeFi
Stablecoins and staking
What they hear from policymakers?
I like blockchain, but not crypto
Translate: I like innovation, but I don't like speculation
Response: you can't have decentralization without crypto assets, world computer vs. world casino
Same activity, same risk, same rules
Translate: political tagline, not sure they really mean
Response: see it as two questions followed by a statement
Crypto is the Wild West
Translate: I'm worried about crypto and illicit finance
Response: Comes down to data
talks about the amount used in illicit finance
definitely a concern, but need to scale appropriately
Remember about politicians
Policymakers are extremely busy!
They have to have thoughts on every major policy
Booked 30min entire day every year
Their thought often comes down to "crypto is bitcoin, FTX or defi"
Where your service is offered is what matters
People think where you incorporate is what matters, in fact, what's most important is where you are offering services.
If state, you need licenses with the state. The same is true for international
Top questions a16z hears
Sanctions questions
if moving any type of value, you have to follow sanctions law
whether you are running a business in the US or not
you need only a little bit of touch in the US to have liability
Think...
How would a criminal in XYZ country try to take advantage?
What can I do to mitigate?
“Im not here to scare you and be the boogeywomen” just here to talk to you about the risk"
Tax questions
Where you need to pay
Do you have reporting obligations
Securities questions
Love these questions the most: How do we design, launch, and build tokens and token ecosystem
How to interact with lawmakers
Reactive
Often unpleasant
98% of the time just looking for info in a case
Reaching out because they seem to believe you may have info access to
Should you get legal counsel? Sometimes.
You shouldn't panic if they reach out - They are often confused about where to look
Proactive
Demos
conferences
schedule meeting
great ops for them to learn and understand
Legal advice on Crypto Twitter
Not who you want to be following when comes to legal and building business
Good for humor and excitement
On crypto in the U.S.
No question we're in a fight in the United States
Significant legal challenges
Anything and everything is part of their regulator's jurisdiction
Crypto is going to be around longer than the Chairman of the SEC.
There are a lot of good parties
I have faith that the courts are going to give us more clarity and info that will cause the agency to go in a different direction or scratch their head that this aggressive approach is needed
Tech is here to stay
The technology is here to stay. The US will get this right. The question is, will it be in one year or three to five years?
a16z Crypto is fighting
"Cdixon 150 meetings a year, Sriram, just as many"
In those meetings, "you see their lightbulb go off"
Spectrum of consumer protection/innovation
Almost always on a spectrum of consumer protection or innovation
Strong protection = anti-innovation
Strong innovation = anti-consumer protection
Embracing decentralization can do both
Remember, regulation is needed
Protect consumers from the casino
Where to find Brian and Michelle online?
Links that came up
Here are some links that came up this week.
Frens
Frens is a map-based crypto messaging app. The app and screenshots of it came up a ton this week due to Farcon and Far(away)Con. The Frens founders are great ❤
EigenLayer
EigenLayer came up a couple of times before and after their controversial airdrop.
Paragraph + Mirror * Kiosk
Leveraging Farcaster for Growth
I gave dozens of builders tips on how to leverage Farcaster for growth. tl;dr be consistent, be authentic, and post from founder vs. brand account (more here)
Here are the tools I use for alerts, feeds, and search.
a16z decentralization and regulation links
On decentralization, an overview by Miles Jennings
On decentralization for builders: principles, models, how by Miles Jennings
On launching compliant tokens by Miles Jennings
On designing effective governance by Porter Smith
On crypto regulations, illicit finance, and more with Michele Korver, Jai Ramaswamy, Sonal Chokshi
Launcher Labs Progress
This week was a record-breaking week! We shipped a couple of new features and lots of small tweaks.
Edit an image curated from a URL or uploaded.
Frameboard cast action - You can now curate to Frameboard directly from Farcaster
Miss out on Farcon? No worries, there's a Frameboard for that.
👋 See you next week!
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