Why Washington’s Web3 Policy Needs an Upgrade

Having spent years analyzing on-chain data, I’ve seen how regulatory uncertainty stifles DeFi protocols more effectively than any smart contract bug. That’s why a16z crypto’s policy chief Brian Quintenz (former CFTC commissioner) recently outlined seven non-legislative actions federal agencies could take today to support decentralized tech—regardless of November’s electoral outcome.

1. Mandate Competition & Innovation Across Agencies

The SEC isn’t the only regulator that should prioritize startup growth. When legacy corporations weaponize regulation as a moat (looking at you, banking lobby), agencies must actively counterbalance this. As Quintenz notes, America’s competitive edge stems from its “band of brave misfits”—Edison, Jobs, Musk—who reshaped industries against institutional inertia.

2. SEC: End Regulation-by-Enforcement

Imagine trying to trade tokens when even SEC staff debate what constitutes a security. The solution? Formal rulemaking clarifying digital asset classifications—something the SEC has avoided since 2019 while racking up $2.6B in crypto enforcement actions. Clarity = functioning markets. It’s not rocket science (though some Ethereum upgrades come close).

3. Kill Zombie Intermediary Requirements

Here’s where my Python scripts weep: Regulators still force blockchain transactions into legacy frameworks requiring brokers, custodians, and other middlemen. But as Quintenz argues, “When code replaces custodians, regulations shouldn’t mandate paper pushers.” This isn’t anti-regulation—it’s pro-efficiency.

4. Transparent Policymaking with Industry Input

The CFTC’s recent public hearings on DeFi exemplify how transparency prevents regulatory capture. Agencies should host open forums without fear of “educating=endorsing” backlash. After all, you wouldn’t design seatbelt laws without consulting automakers (though maybe consult them less on emissions…).

5. Let Regulators Actually Use Crypto

A 2022 ethics rule bars federal employees involved in crypto policy from holding any digital assets—even Bitcoin for their kid’s college fund. Quintenz’s analogy hits hard: “This is like banning DOT officials from riding cars.” Hands-on experience drives sound policy.

6. Blockchain Bootcamp for Bureaucrats

Most senators still think NFTs are JPEGs sold by bored apes. Structured training on concepts like ZKPs and DAOs could transform policymakers from skeptics to informed stewards. Bonus: It might reduce those cringe-worthy congressional hearings.

7. Fund Private-Sector ZKP Research

With China/Russia developing state-backed chains, America risks losing the privacy-tech arms race. Investing in zero-knowledge proofs—which verify data without exposing it—could secure sensitive information while maintaining transparency where it matters.

The Bottom Line: These aren’t partisan issues but practical upgrades for an archaic system. Now if you’ll excuse me, I need to check if writing this article violated any SEC guidance on crypto commentary.