We Deserve a Better Internet
It’s time. We need an internet that can help us retain leadership in a world of increasing competition, unlock opportunity for the millions on the margins of the innovation economy, and enable people to take control of their digital lives. The solution is web3—the third generation of the internet—a group of technologies that encompasses digital assets, decentralized finance, blockchains, tokens, and DAOs. Together, these tools enable new forms of human collaboration. They can break through the stalemates that define too many aspects of public life and help communities make better collective decisions about critical issues such as how networks will evolve, what behaviors are permitted online, and how economic benefits are distributed. We are radically optimistic about the potential of web3 to restore trust in institutions and expand access to opportunity. But realizing that potential depends on smart policy. Good regulation establishes a framework for how innovation can benefit society while managing the real risks that might otherwise harm consumers. It’s time to define that vision. It’s time to build a better internet.
Digital authoritarianism and big tech are, in the long run, incompatible with a healthy open society. web3 is a better way to build digital platforms that are directly accountable to their users.
Too many of our digital systems are broken. They leak data and leave too many people behind. web3 platforms are decentralized, democratized, and far more resilient and inclusive.
Confidence in institutions is at an all-time low. web3 creates new modes of participatory, accountable governance, improves auditability, and introduces technologies to balance the competing needs for transparency and individual privacy.
Our team includes former officials drawn from across government. As the largest investor in the space, we know web3—but we also understand public service.
- Ben Horowitz Cofounder & General Partner
- Chris Dixon General Partner
- Ali Yahya General Partner
- Arianna Simpson General Partner
- Anthony Albanese Chief Operating Officer
- Miles Jennings Crypto General Counsel
- Jai Ramaswamy Chief Regulatory Officer
- Bill Hinman Advisory Partner
- Brian Quintenz Advisory Partner
- Mike Manning Communications
We don’t have all the answers, but we’re eager to work with policymakers, civil society, and other partners to define an affirmative vision for how to use these powerful new tools to benefit society. To unlock the full potential of these technologies, policymakers should:
Prioritize the Development of World-class, Decentralized Digital Infrastructure
We need an overarching strategy for the development of world-class, decentralized infrastructure solutions, including digital identity, digital property rights, secure financial systems, accessible financial services, individual data sovereignty, privacy architecture, and better cybersecurity.
Create Targeted, Risk-calibrated Regulatory Solutions for Different web3 Activities
web3 comprises a wide array of human behavior. Art creation and curation. Video games and collecting. Data archiving and preservation. Publication. Borrowing and lending. Remittances. The easiest way to lose out on all of this potential is to treat web3 as if it were a monolith. Policymakers should focus on calibrating regulatory activities to the specific applications and their associated risks. Treating all digital assets the same is like having a single regulatory framework for stocks, real estate, cars, art, watches, and trading cards. We need policy that’s fit for purpose.
Establish Cross-agency Strategies and Consider a Tailored, Comprehensive Approach to web3 Regulation
web3 includes a host of activities and opportunities that demand different expertise in subjects encompassing intellectual property, network security, data protection, net neutrality, consumer protection, property rights, banks, currencies, derivatives, corporate governance, telecommunications, energy, and many other areas. Cross-agency working groups — not regulatory land grabs — should be the default short-term strategy for moving forward with regulation. Ultimately, policymakers should explore regulatory approaches tailored to the unique attributes of web3. Building a new framework may be more appropriate and efficient than stretching the existing jurisdictional authority of dozens of agencies.
Bring Disclosure-based Regulation Into the 21st Century
Disclosure-based regulation was resoundingly successful in developing efficient, safe capital markets over the course of the 20th century. However, traditional forms of disclosure are not well suited to web3 platforms and protocols, which historically have been highly transparent, open source, and auditable. New disclosure standards should take advantage of the benefits of the technology and should focus on consumer understanding rather than strict technical adherence to legacy rules.
Provide Clear, Fair Tax Rules for the Reporting of Digital Assets, and Consider Technical Solutions for Tax Compliance
Countries worldwide stand to benefit enormously from the economic growth driven by web3. However, revenue services have been slow to give consumers and businesses the basic guidance they need to comply with tax reporting obligations. The irony is that — between blockchains and privacy protocols — the technical building blocks already exist for revenue services to create systems that facilitate the secure, detailed tax reporting of digital assets. Rather than put the onus on individuals and industry players to fill in tax reporting forms that were created for traditional brokerage firms, policymakers should instead encourage revenue services to collaborate with the sector in implementing solutions that leverage the vast technological benefits offered by web3.
Unlock the Potential of DAOs
The corporation was the default mode of organizing human activity in the private sector over the course of the 20th century. DAOs (decentralized autonomous organizations) may become the default mechanism for facilitating collaboration in the 21st. DAOs enable individuals to collaborate, manage projects, own assets, invest, and operate like a traditional organization, but they can provide far greater levels of transparency, openness, and democratic governance. Policymakers should create space for this new cooperation mechanism to flourish.
Align web3 with ESG
Most modern blockchains use energy-efficient proof-of-stake consensus mechanisms. But many projects are going much further and leveraging the technology to support environmental, social, and governance initiatives. Policymakers should work with industry leaders such as MakerDAO, Celo, and Flow that are working on cutting edge, carbon neutral or negative technologies and paving new ground on how the web3 and ESG movements interface. When it comes to the bitcoin blockchain specifically, policymakers should continue working with the bitcoin community to foster greater levels of sustainability and reliance on renewable energy.
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