In a recent episode of the a16z crypto podcast, a16z co-founder Marc Andreessen and a16z crypto founder Chris Dixon discussed the CLARITY Act, which is currently being debated in the Senate. This legislation, seen as a once-in-a-century market structure reform, will directly shape the future of finance and internet technology. Having passed the House with bipartisan support, it now faces a critical Senate review. While debates and obstacles are increasing, the core focus remains on the need for regulatory clarity, the hidden costs of the status quo, and the law's profound impact on technology users in the U.S. and globally.

Marc Andreessen was first asked about his perspective, noting that the issue touches on more than just industry compliance—it's about the foundation of America's tech leadership. Reflecting on the industry's evolution, Andreessen pointed out that when he wrote his January 2014 New York Times column, "Why Bitcoin Matters," the environment was entirely different, and the view was highly controversial. That article was written five years into a major technological wave, and believing in the long-term value of the technology was itself disruptive. Now, every mention of "Bitcoin" in that article could be replaced with "cryptocurrency." While the original vision for Bitcoin to develop into real-world asset tokenization and NFTs hasn't fully materialized as expected, the market has since given rise to numerous new blockchains and crypto platforms, including Ethereum and other public chains. What started as a single technology has grown into a complete industry. Bitcoin itself has been a huge success, but the more notable story is the full-blown innovation across the entire sector, requiring a vast number of people to understand, adopt, and participate in it—a reality that still holds true today.

Chris Dixon added to this, describing the industry's shift from an early niche subculture to mainstream infrastructure maturity. Early participants were mostly enthusiasts, Bitcoin was the only mainstream technology, and newer blockchains generally struggled with performance and scalability. Today, it's almost a daily occurrence to see announcements from major banks and fintech companies launching platforms built on stablecoins, tokenized stocks, and various digital assets. Stablecoins, which are essentially dollars digitized on-chain, now handle transaction volumes comparable to the Visa network, with quarterly volumes reaching trillions of dollars. With stablecoins, a user can open WhatsApp and send money anywhere in the world for almost zero cost, as easily as sending a text message. This is how money should flow, a scenario early internet pioneers had hoped would arrive much sooner. The underlying infrastructure technology has improved dramatically; three years ago, a transaction might have cost several dollars or tens of dollars in fees, whereas now, on major public chains like Solana and Ethereum, transaction confirmation takes less than a second, and transfer costs are less than one cent. This change marks the realization of the dream that money can move as freely as information bits.

However, with major financial institutions like BlackRock, JPMorgan, Fidelity, and Mastercard entering the space, the industry has developed for years without a clear regulatory framework or policy guidance. Chris Dixon explained that crypto regulatory issues have been split into two major parts: stablecoins and the rest of the digital asset market. Last year, the GENIUS Act passed through Congress and was signed into law, providing a comprehensive regulatory framework for stablecoins. For the average American consumer, using USDC or other stablecoins compliant with the GENIUS Act provides confidence that every stablecoin is backed by a dollar reserve held in a bank, offering security and asset protection. For institutions like banks, Stripe, and PayPal, predictable rules and a solid regulatory framework are prerequisites for entry, ensuring their business remains compliant for the next decade. But the unresolved challenge is that stablecoins run on blockchain networks, and the blockchain sector itself, along with other digital assets, still lacks a complete set of federal regulations. This is akin to having cell phone regulations but no rules for the communication towers; half the technology has a regulatory system, while the other half remains in constant uncertainty.

Data compiled by Woofun AI shows that this regulatory asymmetry is heightening compliance anxiety among market participants. Even in this ambiguous environment, entrepreneurs continue to build, doing their best to navigate the boundaries of compliance. Marc Andreessen emphasized the urgency of legislation, noting that the U.S. financial system has gone through similar processes many times, with the classic example being the Securities Act, which created the SEC and established a regulatory system for the stock market. The crypto industry is not asking for subsidies or special favors; it simply wants a long-term, stable regulatory framework. Chris Dixon gave an example, pointing out that currently, there is no federal regulatory body for crypto exchanges in the U.S., while the New York Stock Exchange and Nasdaq are both under a federal regulatory framework. A large part of the CLARITY Act is to fill this gap, granting regulatory authority to the SEC and the CFTC, and establishing a system of disclosure requirements, anti-fraud rules, and insider trading regulations, mirroring the regulatory system of other traditional financial markets. The FTX event is the best example; that exchange lacked standardized auditing and regulation, ultimately leading to a crisis. Once crypto exchanges are federally registered, they would need to undergo standardized audits. The bill gives federal regulators full enforcement powers; any platform that cannot meet compliance requirements would not be allowed to operate in the U.S.

This legislation has been a bipartisan effort for the past seven years. It's been over a year since the House passed the bill text, and the Senate has been reviewing and adjusting it for a full year. The bill clearly defines its scope: crypto intermediaries must adhere to the same anti-money laundering and Treasury regulations as traditional financial institutions. The nation's largest law enforcement agency, the American Police Association, recently publicly supported the CLARITY Act, refuting claims from some opponents that the bill lacks adequate enforcement provisions. The current boundaries of applicable law are extremely vague. Long-term observation shows that when there is a regulatory grey area, the industry is prone to a "race to the bottom." Chris Dixon has long served on the board of Coinbase, and Marc is still a board member. As a domestic company, Coinbase places a high priority on regulatory compliance, but compliance comes with huge costs and slows down product iteration. Every year, new overseas trading platforms emerge, saving on compliance costs and capturing market share with lower fees and faster product updates. Regulatory ambiguity ultimately benefits speculators and bad actors. A clear regulatory framework can clearly define the scope of regulation. For example, under the CLARITY Act, if you are a financial intermediary like Coinbase, or any business that custodies user funds, you must follow the same regulations as companies like Stripe and PayPal. The bill's provisions clearly define this, and multiple law enforcement agencies have publicly supported the bill to curb illegal financial activities and protect legitimate operators from unfair competition.

Responding to criticism that the bill could facilitate sanctions evasion, Marc Andreessen said that most national security professionals he has spoken with disagree with this view. On-chain transactions leave a complete trail, which is in stark contrast to many current modes of terrorist financing. Some within the industry claim that cryptocurrency is inherently anonymous and transactions cannot be traced, but this view is fundamentally based on a lack of technical understanding. Chris Dixon pointed out that, on the contrary, many teams are now investing significant R&D resources into building blockchains with privacy features precisely because the vast majority of public chain transactions are fully transparent and auditable. Privacy features have legitimate value and are by no means intended for illegal activities. For example, when paying for medical or financial services, people don't want everyone to see that transaction; the traditional financial system also has privacy needs. With the enactment of the GENIUS Act and the proliferation of the U.S. dollar stablecoin, privacy issues are being discussed in Washington policy circles. This is reminiscent of the early days of the internet, when HTTPS technology was created by Netscape. At the time, many questioned why ordinary people needed encrypted transmissions. That debate lasted four years, a situation very similar to today's. The Netscape browser was the first widely adopted consumer software with public key encryption. In that era, encryption technology was classified as a munition under the International Traffic in Arms Regulations (ITAR), subject to the same controls as a Tomahawk missile. The Netscape browser was placed in the same control category; only a version with strong encryption could be sold domestically, while the version for export had to be deliberately weakened, with product packaging explicitly stating "weak encryption, do not trust," which hurt overseas sales and drove users to foreign competitors. The debate ultimately boiled down to a core conflict: encryption is a foundational tool for building trust and supporting legitimate business activities, serving law-abiding citizens. The real question was a trade-off: do we want to completely eliminate the risk of cybercrime, or do we want online commerce platforms like Amazon to function normally? This long educational effort took four years, and eventually, the relevant controls were adjusted. The world did not descend into chaos, and more importantly, U.S. companies secured their dominance in the industry, with the global internet economy being led by American firms for the long term.

Another major controversy is about public ethics. Some argue that the president and his family hold interests in crypto-related companies, so the passage of the bill would benefit its supporters. Chris Dixon believes that public officials should adhere to ethical standards, but these rules should not be specific to the crypto industry; similar ethical standards should also apply to stock trading and other financial assets. Even without a specific ethics clause, the CLARITY Act would still impose numerous constraints on crypto market participants: crypto asset risk disclosure, mandatory reporting of holdings, and the addition of lock-up rules. All market participants, including public officials, would face stricter oversight. On a political level, the current situation is frustrating. Normally, public ethics laws and industry regulatory bills would be advanced separately, but the crypto industry is being held to a different standard. Marc added that the constraints the bill sets for public officials using crypto assets are more stringent than the rules for stock trading. Chris further pointed out that public perception of cryptocurrency is mostly limited to trading and speculation, ignoring that through applications like stablecoins, crypto technology is becoming a daily tool. When formulating regulations, it's necessary to distinguish between two scenarios: one is asset speculation, and the other is the daily use of technology. Public officials should have the opportunity to use cutting-edge technology. The current draft of the bill already includes ethical provisions, which are still under negotiation. All parties are hoping to reach a consensus, with the core goal being to end the years-long regulatory grey area.

The controversy over stablecoin interest reflects the tug-of-war between the banking and crypto industries. Banking lobby groups have been strongly opposed, with JPMorgan's stance being particularly prominent, fearing that if consumers could earn interest on stablecoins, it would lead to deposit outflows. Chris Dixon revealed that the final text of the bill largely adopted the banking industry's demands, prohibiting direct interest payments on stablecoin balances. The bill defines that any product that is functionally and economically equivalent to a bank deposit is not allowed to pay interest. However, there is some leeway. For example, if a user makes several purchases a month using a stablecoin wallet at Walmart, a consumption reward mechanism could be set up. As long as it is not interest paid on the balance, it would be compliant, similar to credit card points or consumer rewards. If the rules were tightened further, reward systems like Starbucks points would be affected. It took a long period of negotiation for all parties to arrive at this compromise. The public confrontation between Brian Armstrong and Jamie Dimon perfectly embodies this struggle. However, JPMorgan has a large blockchain team internally and has already launched on-chain tokenized deposits. If the CLARITY Act passes, many bank blockchain projects will be massively deployed. Goldman Sachs CEO David Solomon has publicly expressed support for the CLARITY Act, and major financial institutions like Fidelity and BlackRock have also publicly supported it while building related businesses. Leading fintech companies like Stripe are also deeply involved. Blockchain provides the financial industry with a unified framework for innovation. Institutions can use blockchain to jointly advance financial infrastructure into the 21st century, overcoming the obstacles of multi-party collaboration.

The issue of defining software developer liability is another core debate. Former White House cybersecurity official Carole House raised concerns, arguing that software developers should bear more legal responsibility for the code they write, believing that not having a liability mechanism could set a dangerous precedent for other tech fields like AI. Marc Andreessen believes this approach would be a death sentence for the industry. A software developer cannot possibly predict how their code will be used in the future. For example, if a criminal uses a hotel to plan a crime, should the hotel operator be liable for conspiracy? If an automobile engineer designs a car, and the car is used in a robbery, is the engineer an accessory to the crime? If a product developer is held responsible for all subsequent user actions, the entire sector would be wiped out. Chris Dixon added that if a developer actively induces others to use their code for criminal purposes, that is already illegal and not a point of contention. But the discussion here is entirely different: developers are building open-source software, creating AI models, and developing underlying blockchain networks for positive purposes and sharing them openly. Once the law requires open-source developers to bear unlimited civil and criminal liability, no one will be willing to develop open-source projects. Open-source teams are mostly not well-funded large corporations and cannot handle massive litigation risks. A small team working out of a garage cannot assume unlimited liability. Such a policy would kill startups and destroy the open-source ecosystem. The same conflict appears in the debate over AI regulation. The day overly strict liability rules are implemented is the day open-source technology dies, which would severely damage the entire field of computer science, as venture capital firms would no longer invest in related startups.

Regarding questions about whether the bill breaks the existing securities law framework, Chris Dixon pointed out that the bill's language is very clear. Once a stock is tokenized, it is still a security and is subject to SEC securities laws, with no exemptions. The only distinction made is that the CLARITY Act clearly defines that blockchain-native tokens like Bitcoin and Ethereum, depending on their development stage, would be regulated by either the SEC or the CFTC. Bitcoin was launched by Satoshi Nakamoto, and any new project is inherently centralized in its early stages, with the founding team having control and access to non-public information. Under the bill's rules, the tokens of a new project would initially fall under SEC jurisdiction, requiring full compliance with securities laws, including lock-up rules and mandatory disclosure. As the project develops and reaches a certain level of decentralization, evolving into a network like Bitcoin or Ethereum with no single controlling entity and no conditions for insider information manipulation, regulatory oversight would shift to the CFTC, treating it as a commodity. This is similar to gold, precious metals, crude oil, and wheat. The previous administration also stated that Bitcoin and Ethereum are sufficiently decentralized to be regulated as commodities. For the past decade, this logic has been tacitly accepted by regulatory agencies under both parties and in multiple court cases. The CLARITY Act is simply codifying this long-standing industry consensus into law and clearly defining the standards. Currently, when anyone issues a new token, there are no uniform disclosure rules, no insider trading oversight, and no founder lock-up mechanisms. After the bill is passed, a standard for risk isolation will be formally established. Before a project meets the decentralization criteria, the tokens of the founding team and venture capital firms will be strictly locked up. This is a reasonable regulatory model, allowing consumers, investors, and all market participants to build trust and develop their businesses based on clear rules.

If the CLARITY Act ultimately fails to pass, Chris Dixon says they will continue to push for such legislation. Agencies like the SEC, CFTC, and Treasury can issue some regulatory details within their administrative authority, but rules made by administrative agencies are less stable than laws passed by Congress. Long-term, stable laws continuously protect consumer rights while providing certainty for the industry. Building products often takes years, and if the regulatory policy keeps shifting, it's very difficult for entrepreneurs to decide to invest significant time and capital for long-term planning. Entrepreneurs already have to deal with countless challenges; a constantly changing regulatory environment only adds to the uncertainty. This is the biggest drawback of the bill's failure: it would prolong the industry's period of regulatory ambiguity. From a broader perspective, Marc Andreessen pointed out that this legislation is about continuing America's tradition of leading global technological innovation. It's about U.S. tech dominance. There are only two core questions: Do we want our country to continue leading global technological innovation? And once a technology is born, its development trend is hard to reverse; do we want the industry to be based in the U.S. or hand it over to other countries? Regardless of political stance, all American citizens should support the U.S. in maintaining its global tech lead. This advantage can be translated into tangible economic benefits, raising the nation's wealth and supporting various public expenditures. Tech leadership also profoundly impacts national security. An encryption industry rooted in the U.S. is, on balance, more beneficial than harmful for U.S. law enforcement and national security. For the past hundred years, America has fully enjoyed the dividends of tech leadership. It should strive to maintain this advantage and continue leading for the next hundred years. This is a strategic opportunity for the U.S., following the internet revolution, to once again establish global technology standards through legislation.