Andreessen Horowitz to open London office amid crypto crackdown in US

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Andreessen Horowitz is expanding its global presence by opening its first office outside of the U.S. in London after over a decade.

According to the company’s announcement on Sunday, the London office will open later this year under the management of Sriram Krishnan, one of the firm’s general partners. In collaboration with universities in the U.K., the office will provide support for blockchain technology development and startups.

The renowned Silicon Valley venture capital firm is behind the success of Web3 platforms like Dapper Labs and Foundation and leading companies from Airbnb to Coinbase. It aims to capitalize on the more welcoming environment for crypto entrepreneurs in the U.K. amid the heightened regulatory scrutiny in the U.S.

“We’re thrilled to open our first international office in a jurisdiction that welcomes blockchain technology and is committed to creating a predictable business environment by pursuing regulations that both embrace Web3 and protect consumers,” said Chris Dixon, founder and managing director of Andreessen’s a16z crypto fund.

The decision to open a London office came after months of discussions with U.K. prime minister Rishi Sunak, HM Treasury, the Financial Conduct Authority (FCA) and British policymakers. Sunak expressed his commitment to capitalize on blockchain technology and transform the U.K. into a global hub for Web3.

“That success is founded on having the right regulation and guardrails in place to protect consumers and foster innovation,” said Sunak.

“While there’s still work to do, I’m determined to unlock opportunities for this technology and turn the U.K. into the world’s Web3 center.”

Plans for expansion

As part of its expansion plans, Andreessen Horowitz put its latest investment in the U.K.-based company Gensyn. Previously, a16z has invested in numerous U.K.-based crypto companies, such as Arweave, Aztec and Improbable.

Gensyn was established by Ben Fielding and Harry Grieve, computer science and machine learning research veterans. The tech company has developed a decentralized computing protocol that allows developers to create advanced AI systems on any connected hardware. Its cryptographic verification system ensures the accuracy of the protocol’s machine-learning work.

The venture firm also plans to launch an a16z Crypto Startup School in the U.K. in the spring of 2024. This initiative aims to identify and nurture emerging talent in the crypto and Web3 sectors. More information regarding the application process will be available in the coming months.

“We are in the early innings of crypto. Today there are tens of thousands of crypto developers, but the numbers are growing fast and we expect to see one million developers by 2030,” said a16z in a blog post.

There are a few reasons why a16z is establishing the program in the U.K. Firstly, the U.K. has an abundance of talent and a robust entrepreneurial spirit. The firm maintains the U.K. houses more “unicorns” than other leading European countries like Germany, France and Sweden combined.

Some of the biggest global financial markets and pools of capital are also based in the U.K. It is also home to “world-class regulators.”

A16z launched a similar school in 2019, coaching entrepreneurs interested in building blockchain and cryptocurrency enterprises. Its latest CSS program in Los Angeles attracted 8,000 applicants worldwide from countries such as the U.S., U.K., India, Germany, France, Argentina, Ecuador and Canada.

A total of 26 final companies were chosen to receive investments, guidance from industry experts and the opportunity to present their projects to investors during a Demo Day.

U.S. crypto sector struggling with regulatory clarity

Earlier this year, the U.K. introduced its first formal regulations for the crypto industry, aiming to address concerns following the significant downfall of FTX. Many investors believe the rules will provide regulatory clarity, especially compared to the uncertainty in the U.S.

The U.S. crypto sector has been grappling with a crackdown from the U.S. Securities and Exchange Commission (SEC). Recently, the SEC filed lawsuits against two crypto giants in the country, Binance and Coinbase. Essentially, the lawsuits underline how cryptocurrencies are regulated in the U.S.

The SEC argues many crypto tokens should be classified as securities, which puts them under stricter regulation and transparency obligations. However, another major financial regulatory body, the Commodity Futures Trading Commission (CFTC), classifies tokens such as bitcoin (BTC), ether (ETH) and litecoin (LTC) as commodities.

The conflicting statement has confused those in the crypto sector for years. In a recent interview with the Wall Street Journal, Coinbase CEO Brian Armstrong said he aims to obtain regulatory clarity from the lawsuit.

“Since the CFTC and the SEC have not been able to figure this out, we’re gonna have to have Congress step in and draft legislation that will unblock this issue in the United States,” said Armstrong.

Since the SEC classify these assets as securities, they fall under the regulatory body’s power. Crypto firms, on the other hand, argue that they should operate outside the traditional financial system by design. Currently, there is no clear rule book regulating crypto assets in the country.

“The whole point of this case from our point of view is to go get regulatory clarity,” said Armstrong on Wednesday. “Regardless of the case’s outcome, it’s a step towards clarity.”

Comparing the uncertainties in the U.S. to the regulation crafted by U.K. policymakers and regulators for blockchain and crypto assets, Dixon highlighted a few points.

U.K. lawmakers work constructively with the industry to understand the distinct characteristics of decentralized services and their risk profiles compared to centralized services. They also established a supportive framework for future blockchain applications through innovative regulatory sandboxes.

By adopting an outcomes-based approach, U.K. regulators prioritize effective and meaningful results. At the same time, they will ensure consumer protection remains a top priority throughout the regulatory process.

Efforts to establish legislation from lawmakers

During Consensus 2023 last month, Senator Cynthia Lummis (R-WY) and Congressman Patrick McHenry (R-NC), Chairman of the House Financial Services Committee, expressed their intention to draft legislation to provide clarity to the crypto market structure in the U.S. Lummis has repeatedly expressed concerns about the ambiguous legal framework surrounding digital assets.

On June 2, Chairman of the House Financial Patrick McHenry and Chairman of the House Committee on Agriculture Glenn “GT” Thompson unveiled a discussion draft bill dubbed the Digital Asset Market Structure (DAMS). Both houses are responsible for overseeing the SEC and the CFTC.

The 162-page-long draft will establish the first statutory framework for digital asset regulations in the U.S. It also aims to “provide clarity, fill regulatory gaps and foster innovation while providing adequate consumer protections.”

This draft is still in its early stages, and there is no certainty it will pass as a law. However, as McHenry said, it is the first step to establishing clear rules for the crypto assets ecosystem.


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