Review the proposal of the crypt’s regulation A16Z

When the SEC Hester Peirce Commissioner published his statement 21. February 2025, called “There must be some way out of here,” it was not read as a typical part of the regulatory comment. Title, Narrowing Bob Dylan “Everything along the observation tower”, set tone: frustration, urgency, and may even quiet recognition for clarity.

SEC published Official request for information – Open call for public entry on how to determine whether the cropties should be classified and regulated as securities. It was the first real call in years for a broader crypto ecosystem that will help form the rules.

In response, 13. Marta, the capital Venture Giant andreessen chorowitz (A16Z) submitted a proposal built around what he calls a “control framework of decentralization based on control decentralization”. The idea is this: If the BlockCain network is open, autonomous and is no longer under the control of the central group, then the tokens that do not need to be treated as securities.

It is a neat concept – clean, structured and apparently grounded by logic. But as I dug up the details and talked to experts, including Alice Frei, the security chief and compliance on TransitionThe more complex picture began to appear.

Because while the proposal offers a potential “output”, not everyone is convinced that it does not lead any good.

Promise – and problem – technological-neutral regulation

One of the pillars of the A16Z frame is the idea that CRIPTO regulations should also be “deserving neutral” and “neutral technology”. If Cripto Token works like traditional assets – say, share or bond – it should be treated in the same way according to the law.

But Frey sees a termination.

“The technologically neutral approach sounds fair in theory. But it just does not apply clean for blockin. Cripto is not the rest of the traditional financial system – it is basically basically. This constantly redefines its own economic and functional properties.

She pointed out that any major innovation in Criptou introduced a whole new economic behavior: Bitcoin with decentralized digital scarcity, Etherum with management programming, Collective decision-making, NFTS with digital ownership and deficienced financial markets.

“These are not only new cover for old property. They come with completely different risk models, incentive structures and management challenges. We mean that we regulate what it looks like it is.”

The code is not the only power to drive power

Another key argument in the A16Z proposal is that it is a token design fully built into the Code – which means that its economic logic is pre-programmed and autonomous – then its value should be seen as relying on efforts on third parties. And if that’s true, you wouldn’t go through the Hoveke test.

But according to the FREI, that the logic does not hold on today’s markets.

“Just because the rewards or token Burns automatically does not mean that the market … is estimated in CRIPTO-in-guided much more than code. Speculation, feelings, macro events.”

She has shown a movement of bitcoin prices as an example. Its code can be predictable – fixed supply, concluded cycles – but its assessment would not be cheated wildly based on interest rates, institutional adoption, and even viral tweets.

“See Terra. Its offer of the entire value was self-correction, algorithmic stablecoin in the US dollar through codes of incentives. But it could not be deleted by speculative races. Once reliably guess, and the algorithm deleted it reliably.”

Contradiction “Control Decentralization”

One of the discussed parts of the A16Z proposal is the phrase itself: Decentralization based on control. According to the framework, if operational, economic and control is sufficiently different, the network should be considered decentralized – and therefore outside Jurisdiction Sec.

But Frey challenged the idea that decentralization can be such a clean measure.

“Framing decentralization around the control is already tricky. But when you start building writings to define it, you risk diminishing the decentralization of surface levels for real autonomy.”

In practice, she explained, the most restful decentralized systems still include central impact points. Developers retain control over upgrades. Control tokens often concentrate strength in the hands of early investors. And infrastructure such as exchanges and guardians remain centralized dots.

“Real decentralization is a spectrum,” she said. “It’s not a confirmation box that-or-no. And it pretends to open the door to the performative decentralization that looks good on paper, but does not exist in reality.”

Potential regulatory hole

Greater concern, Frei warned, is as easily proposed frame A16Z can be used – especially without rigorous execution standards.

“You could have a project that looks decentralized on the outside, but still there is insiders pulling the wire.”

It could mean distribute tokens that look widely, but are firmly coordinated behind the scenes. Or management structures that look democratic, but are designed so that decisions are lying to several wallets. Or protocols that manage controls long enough to pass the regulatory test, only to reiterate in different names later.

“If we are not careful,” she said, “This becomes a guide for regulatory arbitration. Not for transparency.”

Where are we going out of here?

To be clear, Frey does not reject efforts behind the A16Z proposal. Like many in the industry, it welcomes the discussion and agrees that regulatory clarity is urgent. But it is skeptical that the framework based on solid decentralization lists really reflects the complexity of today’s landscape crypto.

“We need a model that respects innovations that happens in this area,” she said, “But not ignoring human, economic and dynamics of management that leads him.”

This means that they admit that the technology is not neutral – it changes how the property behaves. This means that the recognition is that the markets are emotional, not mechanical. And that means treating decentralization as a movable target, not a bookmark box.

Regarding the sector, now faces a difficult task that all these feedback is activated in politics. Whether the A16Z frame does this seems to the final image, one thing is clear: The conversation has just begun.

“The goal is not only to regulate the CRIPTO,” Frei told me as we wrapped. “It will do it in a way that protects people – without pretending to be something that is not.”

And maybe, only maybe, there is exit here – but only if we are honest about where we begin.