NEW: FREE Web3 Resume Cheat Sheet DOWNLOAD NOW

A16z calls on DOJ to stop holding DeFi protocols accountable for user actions

In this post:

  • A16z has advised the DOJ to cease prosecuting DeFi protocol developers for user action.
  • Trump’s administration must decode the word “control” regarding DeFi development and use.
  • The new SEC team should be more reasonable towards crypto.

Venture capital firm a16z has called on prosecutors from the US Department of Justice to cease targeting decentralized finance (DeFi) protocols for users’ mistakes, as the protocols lack control over users’ actions.

The firm warned through a blog post that holding people responsible for systems and actions over which they don’t have jurisdiction leads to obstructive outcomes.

Part of the statement read:

Unfortunately, the Department of Justice (DOJ) has ignored this distinction and is attempting to do just that by holding software developers responsible for the actions of third parties that use neutral tools the developers created but no longer control.

A16z

Trump’s biggest policy priority should be decoding the legally correct meaning of control

A16z further asked the new administration to prioritize “codifying the proper and legally correct understanding of ‘control’ in law” as it would help users, DOJ, and software developers understand control in a legal context.

In past legal actions, US prosecutors have targeted cryptocurrency developers for activities conducted on their platforms by others. A16z compared this to holding a car manufacturer accountable for actions by a careless driver that led to a crash. 

They pointed out that the action doesn’t make sense: You can’t blame the carmaker for the accident when someone crashes a car he bought from them. That analogy is quite obvious for vehicles, but cryptocurrency handles it differently.

See also  Ripple CEO slams crypto community for comments on David Sacks’ first press conference

In recent cases like United States v. Storm and Rodriguez, the DOJ has prosecuted the blockchain developers and compared them to unlicensed money transmitters. Critics counter that this approach misunderstands the fundamental nature of control in decentralized systems since developers typically have no direct control over the software once it has been deployed.

The move to unpack “control” is critical to determining whether crypto firms qualify as money-transmitting entities guided by specific rules and regulations.

According to its website, A16z’s portfolio of venture investments includes over 100 crypto companies, including decentralized exchanges (DEXs) such as Uniswap.

Fed’s stance on crypto is bound to change during Trump’s administration

During the tenure of former President of the United States Joe Biden, federal agencies were very strict with crypto cases. The Securities and Exchange Commission, the financial regulator, has opened more than 100 cases against companies and people who have raised money through crypto, claiming they broke US laws.

However, things are expected to change during President Trump’s administration. The president seems accommodating toward crypto and promised to make the US the world’s crypto capital. So far, Trump has replaced SEC leadership with more crypto-friendly appointees.

Cryptopolitan Academy: How to Write a Web3 Resume That Lands Interviews - FREE Cheat Sheet

See also  Huobi sale marred by $30 million-dollar "hole," Justin Sun claims

Share link:

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Most read

Loading Most Read articles...

Stay on top of crypto news, get daily updates in your inbox

Editor's choice

Loading Editor's Choice articles...
Subscribe to CryptoPolitan