Compilation of the original text: Bai Ze Research Institute

Compilation of the original text: Bai Ze Research Institute

After Coinbase, FTX, and Binance successively put forward their visions for encryption regulation, Andreessen Horowitz (A16z), a major venture capital firm in the encryption industry, put forward its own proposals for Web3.0 regulation.

Previously, the regulatory proposals of Coinbase and FTX only focused on U.S. regulations, but A16z’s regulatory proposals are consistent with Binance’s, targeting “world leaders” rather than just the U.S. A multi-stakeholder approach to governance.

The following is the translation and translation:

It's time for a better Internet.

The world deserves technologies that unlock opportunity for millions at the edge of innovation and empower people to take control of their digital lives.

This is Web3.0, a set of technologies including digital assets, decentralized finance (DeFi), blockchain, smart contracts, tokens, and decentralized autonomous organizations (DAO). Together, these tools enable new forms of human collaboration. They can break many deadlocks in life and help communities make better collective decisions about key issues such as how the network will grow, what behaviors will be allowed, and how economic benefits will be distributed.

Web3.0 is the successor of the Internet. Just as the Internet changed the way people communicate and exchange information, Web 3.0 is defined by changing the infrastructure that moves value around the world. After the Internet, the emergence of Web3.0 is the largest global technology ever. The first generation of the Internet, Web 1.0, was incubated within government and civil society before slowly making its way to the world. Web 2.0 (the big tech platforms of today) started as small companies in a handful of geographies and within a few years became the largest commercial arbiter in human history. At the same time, Web3.0 is gradually emerging from all corners of the world. The countries with the largest number of participants in DeFi are the United States, Vietnam, Thailand, China, the United Kingdom, the Netherlands, and Ukraine; major adopters of cryptocurrencies include India, Pakistan, Ukraine, Kenya, Nigeria, Venezuela, and Argentina. Venezuela is a prime example of how financial applications of cryptocurrencies can fill a void in a country with an economically turbulent economy.

But Web 3.0 has more than just its financial origins, which is becoming increasingly evident around the world. Leading Web 3.0 application, marketplace, and game studios have sprung up across the globe, with many projects now being built by global, decentralized teams operating as DAOs. The international developer community is growing at an unprecedented rate.

Web 3.0 represents a profound shift in the way individuals and communities use it. Value creation and benefit distribution are being taken away from centralized players and given to globally distributed community members. Web 3.0 has almost limitless possibilities to enable new forms of ownership and collaboration.

However, realizing the potential of Web 3.0 depends on policymakers willing to lay the policy foundations to unleash innovation. Thoughtful regulation can create a framework that enables innovation to benefit society while excluding real risks that could harm users.

Given the rapid growth of Web 3.0, now is the time for world leaders to get involved. Policy development around Web 2.0 has been largely inadequate and slow. We should not repeat this mistake on Web3.0. Instead, policymakers should consider how they want to use digital tools in an open society, and how we should design and define the success of the next generation Internet.

We believe that Web 3.0 should be structured around a clear set of goals. Specifically, the next generation network should be:

We believe Web 3.0 will be the cornerstone of a new life-changing financial and digital infrastructure. In a decentralized system, the value belongs to the platform and its users rather than an intermediary. These systems are more resilient because they are distributed. Current Web 3.0 projects have demonstrated their great potential.

Whether or not these projects are successful, innovation is here to stay. These innovations include digital scarcity, trustless peer-to-peer collaboration and value exchange, auditability, and a mature digital economy.

Now is the time to work together on behalf of the international community to lay the groundwork for Web 3.0 to thrive globally. This should be a shared task for policymakers, civil society and the private sector. To facilitate dialogue, this document sets out 10 key principles of how the international community should work together. While we are still in the early days of Web 3.0, the work must start today.

1. Countries must have a clear vision on how to promote decentralized digital infrastructure

Because there is no single point of failure or control, Web 3.0 infrastructure is a significant improvement over existing fragile, centralized, exclusive systems.

A national technology strategy should incorporate the benefits of blockchain technology that are critical to society, such as identity, property rights, and ownership, protecting the financial system while enhancing financial inclusion and cybersecurity. Personal data sovereignty and privacy should be the cornerstone of this Web3.0. From a design perspective, this will have the added benefit of enhancing compliance with existing laws: the auditability of Web 3.0 combined with privacy solutions such as zero-knowledge proofs promises to significantly reduce the cost of compliance.

2. Accept multi-stakeholder governance and governance

When it comes to the future of Web 3.0, the public sector, the private sector, and society each have unique contributions of expertise and perspectives. Therefore, policymakers should explore regulatory frameworks overseen by multi-stakeholder organizations. A prominent example of such an organization is the Brazilian Internet Steering Committee, a government agency created in 1995 and run by representatives of various ministries that has successfully regulated innovation and access to Internet services in Brazil for almost three decades.

3. Create targeted, risk-calibrated oversight regimes for different Web 3.0 activities

Web3.0 encompasses a vast array of human activities such as art creation and curation, video games and collecting game items, data archiving and storage, publications, lending, remittances, and more. The easiest way to summarize all of these potentials is to think of Web 3.0 as a whole. Treating all digital assets in the same way is akin to having a single legal regime covering "stocks, real estate, cars, art, watches, and trading cards."

Distinguishing between protocols and applications is key. TCP/IP, HTTP, SMTP, and TLS/SSL are all protocols we interact with every day—the building blocks of the internet and basic applications like email and file transfer. The technical standards for these protocols are set by a handful of government agencies, non-profit organizations, private sector entities, and academic institutions. Importantly, no one controls these protocols. Nonprofit organizations such as the Internet Engineering Task Force, made up of volunteers, may develop specific standards, but the protocols themselves are open and jointly developed. Similarly, the Ethereum blockchain adopts the open model of Web3.0, and non-profit organizations fund the development of related technologies as part of the overall Web3.0 ecosystem.

Much of Web 3.0 consists of open protocols, including those for storage, computation, lending, and value exchange. Like Internet protocols developed over the past 6 years, Web 3.0 protocols thrive on the strong community that supports their development. The development of such protocols is open, distributed, and transparent, so the protocols are resistant to malicious changes and neutral to the applications that use them. Regulation should take advantage of these benefits.

4. Fostering innovation through the power of composability, open source code, and open communities

Composability is a fundamental feature of Web3.0. Just like a set of Lego bricks can be assembled into many different shapes, anyone can use smart contracts and put them together in new and different ways. If someone has already created an innovation using smart contracts, you can modularly integrate that solution into your project instead of developing it from scratch.

In Web 3.0, open communities where anyone can participate and contribute enhance composability. This creates a further virtuous cycle where contributors to successful projects benefit from the added value. Web 3.0 could even open up entirely new financing models for public goods. Policymakers should work to accelerate these innovation flywheels—for example, by lowering barriers to entry and promoting data portability.

5. Broaden the economic benefits of the innovation economy

In Web 2.0, the economic benefits of the web flow overwhelmingly to the large corporations that run the web. In Web3.0, network value is attributed to users, communities and developers who actually create value, not middlemen. It is critical that individuals, especially those currently on the fringes of innovation, have the opportunity to create value on this new digital network and reap the benefits of their efforts.

For example, distributed networks such as Helium share economic benefits with the individuals and communities hosting the network infrastructure. Playing games, such as Axie Infinity, enables gamers to earn rewards and money from the games they play, and is fast becoming a global, promising new field. Likewise, the Web3.0 creator economy enables artists, musicians to ultimately receive most of the income from their work, rather than letting the income be earned by platforms and middlemen.

6. Unlocking the Potential of DAOs

The corporation was the default model for organizing work activities in the private sector in the 20th century. And DAOs could become the default mechanism for facilitating collaboration in the 21st century. A DAO enables individuals to collaborate, manage projects, manage assets, invest and operate like a traditional company, but it can also provide a higher level of transparency, efficiency and accountability than the traditional corporate model. It is important to create the space for this new collaborative mechanism to thrive, ensuring that DAOs have the same basic legal protections as traditional corporate structures.

7. Deploying Web 3.0 to further the Sustainable Development Goals

Web 3.0 platforms have the potential to drive value in support of the Sustainable Development Goals, for example by improving the liquidity, integrity and utility of carbon markets.

Payment-focused blockchain Celo can process 7 million transactions per ton of CO2 and become about 8 times carbon negative through offsets. By comparison, one estimate puts the Visa network, which aims to be zero-carbon by 2040, 70% less efficient. Other Web 3.0 projects, such as MakerDAO's "Clean Money" proposal, hope to innovate at the forefront of clean energy financing. So Web 3.0 should be used in novel ways to support the global sustainable development goals.

Leading Web 3.0 projects, for the most part, don't need to consume a lot of energy. The Ethereum blockchain, the most commonly used protocol for Web 3.0, will soon use an energy-efficient Proof-of-Stake (PoS) consensus mechanism that reduces energy consumption by a factor of 1,000.

In the meantime, policymakers should continue to work with the Bitcoin community to bring higher levels of sustainability and renewable energy use to the Bitcoin blockchain. Efforts are already underway: Cambridge Financial Center found that 76% of bitcoin miners are using renewable energy sources, and 39% of total bitcoin mining electricity consumption comes from renewable sources—twice as much as the U.S. grid.

8. Embrace the role of well-regulated stablecoins in financial inclusion and innovation

Over the past decade, financial technology has been incredibly successful in improving the consumer financial experience. Yet little has been done to upgrade and improve core financial infrastructure, especially in international payments, clearing and settlement. This means that billions of people around the world are excluded from existing systems due to prohibitive costs.

Decentralized finance (DeFi) technologies can already process hundreds of billions of dollars in transactions per day, suggesting that there is a path to global 24/7 instant finance. Stablecoins are a fundamental building block of DeFi, and they provide a key prerequisite: a stable, programmable, native digital representation of value.

To avoid falling behind competitors and provide more opportunities for financial inclusion, the international community should support well-regulated stablecoins by providing a clear and reasonable regulatory framework. Facilitating the growth of the stablecoin ecosystem will involve creating multiple regulatory approaches for different types of stablecoins.

Policymakers should also seriously consider the compliance benefits of stablecoins. Stablecoins, for example, could enable auditing and disclosure far beyond anything consumers and regulators have access to today. And when combined with an appropriate privacy architecture, they could also provide national security and law enforcement agencies with new ways to detect illicit activity and enforce sanctions.

9. Collaborate with other countries to harmonize standards and regulatory frameworks

International cooperation on regulatory frameworks is absolutely necessary to realize Web 3.0. Policymakers should also examine how Web 3.0 can be an enabling technology for multilateral cooperation to address hitherto intractable global challenges.

An example: countries should work together to usher in a new era of cross-border payments. Today's cross-border banking transactions can involve five or more intermediary banks and take days to complete due to incompatible regulatory requirements. This means that the average cost of sending a $200 remittance using traditional infrastructure is around 7%. However, cross-border payments using decentralized technology can be done instantaneously and for negligible fees.

Of course, international cooperation is also critical to prevent bad actors (criminals, etc.) from taking advantage of Web 3.0. Web 3.0 infrastructure, such as permanently distributed data storage, can further improve security by disrupting ransomware attackers and others.

10. Provide clear and fair tax rules for the reporting of digital assets and leverage technology solutions to achieve tax compliance

It is in the mutual interest of the state and the Web3.0 community to facilitate tax compliance across the ecosystem. Tax agencies can be smart about taking advantage of Web 3.0 technologies. If tax reporting obligations need to be expanded to capture Web 3.0 activity, this should generally be undertaken by actors collecting relevant information not available to agencies themselves. In the case of public blockchains (public blockchains), no participant in the network has more information than the tax agency through proper blockchain analysis. At the same time, it doesn’t make sense for tax authorities to publicly look at every transaction anyone makes, and should consider ways to improve compliance through privacy — for example, by building strong audit trails using zero-knowledge proofs.

A16z conclusion:

According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice

risk warning:

According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice