a16z Presented First Proposals under the GENIUS Act

• Andreessen Horowitz has called on the US Treasury to allow private decentralized digital identities amid the controversy over the GENIUS Act.
• Also, a16z suggests that FinCEN should update AML/KYC and introduce ZKPs for verification.
• The company proposed to differentiate between types of stablecoins.

Investment company Andreessen Horowitz (a16z) has submitted the first round of proposals to the US Treasury Department on the implementation of the GENIUS stablecoin law, advocating the creation of a decentralised digital identity system using privacy-preserving technologies. This was reported by Michelle Korver, Head of Regulatory Affairs at a16z.

In the statement, the company stressed that the update of anti-money laundering (AML) and customer due diligence (KYC) rules should take into account modern cryptographic solutions, such as zero-knowledge proofs (ZKPs) and multi-party computing (MPC), which allow for identity verification without excessive disclosure of personal data.

She added that outdated regulatory frameworks are holding back innovation, and that the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) should use its authority to grant “exemptions” to financial institutions that adopt digital identity.

a16z also highlighted the advantages of decentralized systems over centralized ones, noting that the former “empowers individuals to control their data, reduces cyber risks, and avoids surveillance pitfalls.”

The company noted that reusable digital credentials can simplify compliance, reduce fraud and improve the detection of illicit financial flows, while reducing costs for institutions.

In its response to the Treasury Department’s Advance Notice of Proposed Rulemaking on implementing the GENIUS Act, a16z supported the creation of “clear, innovation-friendly rules for stablecoins” that will strengthen the dollar and protect consumers.

The company recommended:

• Clearly distinguish between decentralized stablecoins and payment stablecoins
• Promote competition and ensure a level playing field for all market participants
• Update AML approaches with technological solutions
• Adapt tax regulations to the real use of digital assets

As a reminder, President Donald Trump signed the GENIUS Act into law in July 2025. The document creates a federal framework for the regulation of stablecoins, requiring their issuers to ensure that their assets are fully backed up and audited.

At the same time, Democratic Senator Elizabeth Warren has repeatedly criticized the law, calling it a “soft regulatory structure for crypto banks” and warning of risks to financial stability.

Coinbase has also submitted its recommendations to the Ministry of Finance, calling for a narrower scope of GENIUS to avoid undue pressure on innovative companies and open protocols.