Unlike Washington, Andreessen Horowitz has a plan to move forward with cryptocurrency legislation

In early November, Collin McCune joined Andreessen Horowitz Crypto as head of government affairs, after serving as Republican deputy director of personnel for the House Financial Services Committee and rank-and-file member Patrick McHenry (RN .C.).

To put it lightly, she has begun her new role at a turbulent time. On Nov. 2, CoinDesk released Alameda Research’s balance sheet, setting in motion the collapse of not only FTX and Sam Bankman-Fried, but also years of lobbying efforts by the cryptocurrency industry.

While a16z did not have direct exposure to FTX, the firm has not been immune to the Crypto Winter. Like Fortune Detailed in a recent report, a16z in March bought a large stake in Yuga Labs, maker of Bored Ape NFTs. Since then, the overall NFT market has plummeted by as much as 97%. Additionally, the Securities and Exchange Commission has reportedly launched an investigation into whether Yuga Labs is offering unregistered securities, highlighting the regulatory uncertainty surrounding cryptocurrencies.

And according to the Wall Street Journala16z’s crypto fund has lost 40% in value in the first half of this year.

As the cryptocurrency industry finds its footing in the post-FTX world, a16z is positioning itself at the center of the conversation in Washington through hires like McCune and Brian Quintenz, a former Commodity Futures Trading Commission commissioner.

Fortune spoke to McCune on Friday, following a chaotic week that saw the arrest of Sam Bankman-Fried and congressional hearings held by both the Senate and McCune’s old employer, the House Financial Services Committee. who led bipartisan discussions on possible cryptocurrency legislation.

This interview has been edited for length and clarity.

We had two very different hearings this week in the House and the Senate. What were your takeaways?

First, the FTX situation is obviously a dire situation. It is clear that the industry will have to rebuild some confidence here. But I think it’s important to remember, and this is what you’ve really heard from both sides of the aisle and from both hearings, that this is not unique to cryptocurrencies. Reports over the last month have shown that this appears to be a classic case of fraud. What you’ve seen since the House hearing, specifically with [FTX CEO] John Ray as a witness, it was much the same.

Collectively, what I’ve heard from Democrats and Republicans is that there is a need for clear regulation in the US Clear and thoughtful regulatory guidance will protect retail investors and give more precise direction to developers who want to get down the right path. I also think there is obviously more work to be done on the education front.

There are some members who are quite sure and have made up their minds about this. But even members who have been able to take the time to understand the technology and have been able to speak with nuance—it’s really easy to take a breakdown like this and generalize and denounce, but it’s so much harder to learn, understand, and talk about what is and what is not.

This is a complicated problem. Both hearings were about figuring out what happened and ultimately trying to protect consumers. The key piece here is what happened to the customers. What I saw was Democrats and Republicans trying to get to the bottom of how we can ensure this protects consumers going forward.

You wrote a Discussion on Twitter earlier this week where you claimed FTX was a case of fraud, not a failure of the technology. But at the same time, in both hearings, there was a good deal of skepticism expressed by lawmakers. It will be difficult for the cryptocurrency industry to shake that association with FTX. How can the industry convince lawmakers that it’s more than Sam Bankman-Fried, who to many people was the face of cryptocurrency in Washington?

It will be a challenge. The advocacy aspect of cryptocurrencies in recent years has been a major boost to education. Clearly, we will have to continue on this path. There are some legislators who have decided. The difference here is that, in the FTX crash, crypto has gone from being more of an elective for people to something that needs to be addressed. MEPs will be forced to sit down at the table on legislation. At that point, it will be up to us, and also the broader cryptocurrency advocates, to make sure we put the right things in front of people to make sure they really understand the differences in technology.

I think virtually all lawmakers have pondered the need for regulation, but there is disagreement about what that might look like. It might mean not actually passing new laws but working inside existing frameworks. So for someone like Senator Elizabeth Warren, it’s a new bill than much of the cryptocurrency industry find unsuitable. How do you take that broader need for regulation and narrow it down to something lawmakers can actually agree on?

First, there have been a number of quality propositions that have been made that are bipartisan in nature over the past couple of years – everything from bills on market structure to things like stablecoins. We must continue to build on that bipartisanship. Trying to close that gap is obviously a very difficult thing. Legislating is difficult. But when you have champions in a bipartisan way, it starts within the actual legislative circles instead of just coming from outside. We are an accompaniment to the way legislation is implemented and changed.

What many have tried to do is lead with something like stablecoins, something that is a little more bipartisan. Obviously, there are hurdles and the devil is in the details, but if there can be movement on something that has broad agreement that it should exist, which I think there is, that can be a benchmark for the rest of cryptocurrency legislation.

When you said they’re from outside, do you mean people like you?

The wider community. It is helpful for lawmakers to hear people who have government experience speak up. But I also think it’s incredibly critical for people to hear from the Web3 industry, particularly if they’re in their district or their state, and they’re creating new things. Hopefully we can be a piece of that puzzle.

How do you think the FTX crash affected legislative appetite among lawmakers and for what type of regulation?

It is clear that cryptocurrency legislation is now at the forefront of the minds of policy makers. Overall, it’s positive. But it’s vital we continue to work with policymakers to ensure that policy strikes the right balance between protecting consumers, not stifling innovation, and obviously not stifling the future of Web3’s promise.

The collapse of FTX is tragic. But, ironically, its failures weren’t Web3’s failures. They come from centralized structures. It strengthens the case for DeFi and Web3 more generally. This demonstrates the importance of bringing everything together in a transparent way without depending on a centralized actor to make decisions.

You are entering this role after working for the senior House Financial Services member who will become the Speaker in the next session of Congress. How do you think the leadership change will impact the legislation?

It is always difficult to legislate meaningfully in a divided government. This poses its own inherent challenges. But having a champion lead one of the primary committees in the House will be critical. There is some bipartisan consensus, particularly in the Financial Services Committee, but also in many other committees that will help guide the conversation.

There was a surprising contrast of cryptocurrency knowledge expressed by lawmakers. Taking on your new role at a16z, do you have a message for your portfolio companies on how they should approach regulators?

People who don’t have context for DC are generally pretty scared of DC. The culture isn’t always welcoming, because they’re worried about saying something wrong. One of the things I’ve tried to encourage people to do is go out and talk to your members. Explain the situation and what you are trying to build. In general, especially from a lawmaker’s perspective, they’re usually very open to hearing about great new things that are coming and how they can improve the lives of everyday Americans.

Particularly in the technology space, when you’re talking about problems that can be complex, you need to bridge the knowledge gap there. It’s almost like speaking two different languages. One of the ways I’ve found that I’m successful is talking through games or NFTs. There is a path there through which people can understand the tangibles. This was an eye-opening moment for some members.

It is clear that regulatory uncertainty around topics such as securities harms a16z’s own interests. What are your priorities in this new role?

I came to this role because Web3 is at a critical juncture. The last few months have been really tough. My main focus is to highlight the huge number of Web3-based projects that are improving the Internet, and frankly, I see myself as a bridge between the Web3 community and Washington.

What does it look like practically?

I think a16z is well regarded in the Web3 community. As they expand their reach in Washington, they help build coalitions from outside that can make some complex issues simple for lawmakers. The other thing is being able to communicate effectively on a regular basis with key staff members and legislators as well.

There is a really strong Web3 community in Washington, DC. We are one piece of that puzzle and are uniquely positioned with our diverse range of technicians to help explain what needs to be explained.

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