The Regulatory Crossroads for Web3

Let’s face it: the US regulatory approach to crypto resembles a bureaucrat trying to use a rotary phone to mine Bitcoin. Brian Quintenz, a16z’s policy lead and former CFTC commissioner, nails it with his diagnosis: outdated rules designed for centralized systems are strangling decentralized innovation. Here’s how Washington could pivot—today—without Congress lifting a finger.

1. Mandate Competition & Innovation as Agency KPIs

Imagine if every regulator’s bonus depended on how many startups they didn’t suffocate. America’s tech dominance was built on outliers like Musk and Jobs, yet current policies often favor incumbents. Case in point: compliance costs that act as moats for Big Tech. Agencies should bake competitive innovation into their mission statements—or risk becoming irrelevant.

2. SEC: Clarity Over Enforcement Theater

The SEC’s “regulation by lawsuit” strategy is like playing whack-a-mole with a blindfold on. A formal rulemaking process for asset classification would end the guessing game that’s paralyzed exchanges and VCs alike. Pro tip: When even your lawyers can’t define a security, maybe it’s time for clearer rules.

3. Kill the Intermediary Obsession

Forcing DeFi protocols to pretend they’re Charles Schwab is like requiring emails to pass through telegram operators. Blockchain eliminates middlemen—and their associated risks (looking at you, FTX). Regulations should evolve beyond 20th-century assumptions about custodians and brokers.

4. Transparency ≠ Weakness

Closed-door policymaking breeds distrust. Public comment periods and education-focused roundtables (without enforcement threats looming) could prevent disasters like the OCC’s misguided stablecoin interventions. Remember: sunlight disinfects.

5. Let Regulators Touch Crypto

The current ethics rule banning officials from holding crypto is akin to prohibiting FDA staff from consuming food. How can you regulate what you can’t experience? Even $10 of Bitcoin would build empathy.

6. Blockchain Bootcamp for Bureaucrats

Most regulators still think ZKPs are a Harry Potter spell. Partnering with universities for crash courses in smart contracts and DAOs could prevent cringe-worthy congressional hearings (“Mr. Zuckerberg, how do you sustain profitability?”).

7. Fund Privacy Tech R&D

While China develops surveillance chains, the US should back privacy-preserving tech like zero-knowledge proofs. Imagine verifying your taxes without revealing income—that’s the future agencies should enable.

Bottom Line: These steps won’t fix everything, but they’d prove Washington isn’t stuck in the dial-up era of policy. Now, about those crypto trading permissions for staffers…