WASHINGTON — There was lunch at a French bistro close to Congress with Senator Kirsten Gillibrand of New York, and a gathering with a few of President Biden’s high financial aides. Then got here a personal dinner with a significant monetary regulator.

The matter was all the time the identical: “how to win the future” within the international race for cryptocurrency dominance — no less than from the attitude of Andreessen Horowitz, the Silicon Valley enterprise capital agency that dispatched a crew of Washington insiders to make its case throughout a current five-day lobbying blitz.

At a second when know-how firms have a foul odor in Washington and because the fast-evolving crypto {industry} is drawing growing scrutiny from lawmakers and regulators, Andreessen Horowitz is pursuing a very audacious plan: to each personal large chunks of the rising world of digital currencies and have a hand in writing the foundations for the way it will function.

To push its agenda, the agency has employed an array of skilled authorities palms. They embrace Tomicah Tillemann, a former aide to Mr. Biden when he was a senator; Katie Haun, a onetime Justice Department cryptocurrency prosecutor; and Brian D. Quintenz, who joined the hassle simply days after leaving the Commodity Futures Trading Commission, a crypto regulator.

Already, Andreessen Horowitz — additionally identified by the nickname A16Z — has funded no less than 50 crypto start-ups, with a number of new offers introduced weekly, making it the most important crypto investor globally.

This summer time it arrange a brand new $2.2 billion funding fund to revenue off the speedy development of cryptocurrency and the technological and monetary structure behind it.

It can also be a significant investor in Coinbase, one of many largest cryptocurrency exchanges, together with numerous newer start-ups. The agency has introduced on so many individuals with {industry} experience that the hiring spree has develop into a operating joke on Twitter.

The imaginative and prescient that A16Z’s founders, Marc Andreessen and Ben Horowitz, are pursuing is to be on the heart of a booming new ecosystem of digital know-how that may disrupt industries as assorted as artwork, banking, finance, gaming, e-commerce, music, social media and telecommunications.

Their regulatory proposal highlights points with normal bipartisan help: overcoming China’s head begin in digital forex and funds, reclaiming America’s position because the main know-how innovator and increasing financial alternative.

“To the extent policymakers can get access to good information, that is going to help them solve their problems and also enable the next generation of the internet to flourish in a way that’s going to be good for us,” Mr. Tillemann mentioned. “That’s mutually beneficial.”

But the proposals, exterior consultants who’ve examined them say, are much more about self-interest than societal or nationwide advantages.

“This is a pretty nakedly transparent attempt to benefit their bottom line,” mentioned Lee Reiners, a former supervisor of systemically essential monetary establishments on the Federal Reserve Bank of New York.

Draft laws A16Z is circulating would give the businesses it has invested in a leg up by exempting associated entities from sure tax reporting, shopper safety and anti-money-laundering necessities.

“This is a classic case of asking the fox to design the henhouse,” mentioned Rohan Grey, a finance lawyer and regulation faculty professor who has suggested congressional Democrats on laws to manage digital funds that’s pending within the House. “They say things in a way that sounds reasonable, but it involves them essentially giving up very little in the public interest.”

Rachael Horwitz, a spokeswoman for A16Z, mentioned the corporate welcomed this debate. “We are making big bets on founders and ideas with the potential to shape the future in the hope that they’ll topple the gatekeepers and middlemen of the past,” she mentioned.

From its inception in 2009, Andreessen Horowitz has trumpeted a special strategy to enterprise capital.

It promoted the cult of the founder — the concept the hard-driving entrepreneurs who begin an organization are greatest positioned to steer — and as an alternative of simply supplying capital it provided assist with recruiting, gross sales and advertising.

It was a philosophy rooted in private expertise. At 22, as a current graduate in laptop science from the University of Illinois at Urbana-Champaign, Mr. Andreessen helped create Netscape, the primary in style internet browser, in 1994. Mr. Horowitz joined Netscape initially of a conflict with Microsoft, which dominated the non-public computing market and intentionally restricted entry to the browser. Netscape was bought to AOL for $4.2 billion in 1998, and a yr later, the pair began an early cloud-computing firm that was bought to Hewlett-Packard for $1.6 billion in 2007.

As enterprise capitalists, Mr. Andreessen and Mr. Horowitz aggressively raised cash and outbid rivals, taking early stakes in Facebook, Twitter, Pinterest, Airbnb and Slack. Mr. Andreessen outlined the strategy as “us versus the world.”

Andreessen Horowitz fashions itself on the Hollywood expertise administration agency Creative Artists Agency, which embraced the outsize ambition of representing each Hollywood star.

“The goal was basically monopoly,” one in all C.A.A.’s founders, Michael Ovitz, mentioned in an April dialogue on the A16Z-backed audio app Clubhouse with Mr. Andreessen and Mr. Horowitz, who introduced him on to elucidate his company’s affect on them.

Andreessen Horowitz’s first cryptocurrency funding was in late 2013 with a $20 million preliminary wager on Coinbase. Soon after, Mr. Andreessen wrote in an opinion article in The New York Times that Bitcoin, the world’s first cryptocurrency, heralded a seismic technological shift, on par with the PC within the Seventies and the web within the Nineties.

“Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the internet era,” Mr. Andreessen wrote.

Coinbase went public in April, with Andreessen Horowitz’s stake valued at $11 billion.

In 2018, the agency began its first fund devoted to crypto investments, elevating $350 million. It was a separate authorized entity to adjust to securities guidelines that restrict enterprise capital companies’ allocations to riskier investments, like cryptocurrency companies.

But seeing crypto’s rising potential, Andreessen Horowitz reworked from a enterprise capital agency right into a registered funding adviser in 2019 — a expensive transfer that subjected it to higher regulatory oversight however allowed it to pursue crypto offers unfettered.

The agency created a second $515 million crypto fund in 2020 and a 3rd $2.2 billion fund this yr.

Delivering vital returns on all this funding, executives at A16Z shortly realized, would necessitate enjoying a significant position in shaping guidelines for these firms.

The solar was setting because the sound of navy helicopters often drowned out the chatter at an A16Z cocktail get together alongside the Washington waterfront. The gathering featured many of the agency’s just lately employed coverage crew, milling about on a patio as they nibbled on crab desserts and sipped drinks, wrapping up their five-day lobbying push.

No different crypto participant within the Washington affect sport has a lineup that rivals the crew A16Z has assembled.

Ms. Haun, who began the Washington lobbying effort, serves as co-director of the $2 billion cryptocurrency fund. While on the Justice Department, she helped prosecute two undercover federal brokers who stole lots of of hundreds of {dollars}’ value of Bitcoin from Silk Road, a bootleg dark-web market they have been investigating.

She joined A16Z in 2018 and this summer time introduced in Mr. Tillemann, who’s now the crew’s chief advocate in Washington.

Other new members embrace William H. Hinman, the previous director of the company finance division on the Securities and Exchange Commission; Brent McIntosh, a former Treasury below secretary throughout the Trump administration; and Jai Ramaswamy, who ran the Justice Department’s cash laundering division throughout the Obama administration. Each of them, together with Mr. Quintenz, who was an outspoken booster of crypto whereas on the C.F.T.C., participated in briefings with monetary regulators, members of Congress or White House officers.

But none of them are registered as lobbyists. Mr. Tillemann argued that’s not what they have been doing in Washington. “We don’t think we need a lobbying team right now, and we don’t view this as a lobbying effort,” he mentioned, calling it “an opportunity to work constructively with policymakers to solve problems of mutual concern.”

The agency claims its representatives don’t have to register as lobbyists due to a loophole limiting the registration requirement to those that spend no less than 20 p.c of their time lobbying.

During their pitches in Washington, the A16Z crew members continuously talked about their dedication to “democratizing” the web. They mentioned the decentralized nature of cryptocurrency would make it simpler for extra folks to achieve entry to loans and investments by way of crypto platforms akin to Compound and Uniswap that Andreessen has backed.

And they mentioned cryptocurrency would allow artists, musicians and influencers to earn cash free from costly middlemen, by A16Z-backed platforms like Open Sea, which permits them to promote their work utilizing nonfungible tokens, or NFTs, which show possession of a selected piece of artwork or music discovered on-line.

But Mr. Reiners and Mr. Grey, legal professionals who’ve carefully learn A16Z’s regulatory proposals, and Dan Awrey, a Cornell Law School professor and monetary regulation skilled who has suggested international monetary establishments, mentioned they have been troubled by many key components of the plan. They mentioned it was self-interested and would create pathways to evade present laws, leaving shoppers susceptible.

They pointed to a provision A16Z included in draft laws that will create an exemption from the Investment Company Act of 1940, which topics firms to oversight by the S.E.C.

Certain crypto start-ups that A16Z is funding are being organized round a brand new kind of entity known as a decentralized autonomous group, or DAO, which might be exempt from the act below A16Z’s plan.

This exemption is warranted, A16Z argues, as a result of DAOs are supposedly run by the neighborhood of crypto customers moderately than for-profit executives. But the monetary backers of those platforms nonetheless stand to make appreciable earnings as a result of the founders of the crypto start-ups typically personal a large share of the particular crypto tokens that may, in some instances, grant voting energy to assist govern these platforms.

The A16Z proposal would additionally restrict the power of the Consumer Financial Protection Bureau to manage DAOs past requiring sure disclosures. It as an alternative proposes that the federal authorities think about counting on an industry-created “self-regulatory organization” to outline and implement how shoppers are handled. And it might give preferential tax remedy to DAOs, limiting info they’ve to show over to the Internal Revenue Service and making so-called member dues that they acquire tax exempt.

The internet impact of A16Z’s proposals, consultants mentioned, can be to open loopholes that the agency and different monetary {industry} gamers, even perhaps hedge funds, might use to reorganize themselves in a manner that would undermine the monetary regulatory system.

“In the name of democratizing finance, what I am seeing is a game of three-card monte where they are moving balls around hoping people don’t understand the game is rigged,” Mr. Awrey mentioned. “But what they are calling for here is the wholesale exemption from some of the most important investor protection laws in the United States.”

In a 10-page response the corporate offered to The Times, one A16Z lawyer wrote that “we welcome clarifying feedback on how to tighten this up to avoid creating a broader exemption than was intended.”

The White House and lawmakers declined to debate their conferences with the agency’s representatives intimately, however firms within the {industry} mentioned Andreessen Horowitz’s efforts in Washington have been a part of what made it a sexy funding associate.

“The law is the law, but it’s just a question of how it is applied,” mentioned Ian Lee, one of many founders of Syndicate, a crypto start-up that selected A16Z to steer its funding spherical in June. “It’s a big reason why partnering with Andreessen Horowitz and its legal and regulatory team made a lot of sense.”


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