a16z’s Marc Andreessen Calls Proposed Developer Liability Rule In The CLARITY Act A 'Kill Shot To The Industry'

The debate over developer liability heated up after former White House cybersecurity official Carole House said software developers should be held more legally responsible for how their code is used.

• Marc Andreessen described a proposed developer-liability provision in the CLARITY Act as a “kill shot” for the crypto industry.
• He said holding developers accountable for misuse of their code in the future would make open-source software development legally unworkable.
• Andreessen and Chris Dixon both defended the ethics and stablecoin provisions of the bill, saying they strike a balance between innovation and regulation.

Marc Andreessen, general partner at Andreessen Horowitz (a16z), said a proposed developer-liability standard floated during negotiations over the Digital Asset Market Clarity Act, or CLARITY Act, would be a "kill shot to the industry."

The comments came during a wide-ranging a16z crypto podcast interview on Saturday in which Andreessen and a16z co-founder Chris Dixon pitched the market structure bill against a series of objections raised by lawmakers, banks and critics previously as the legislation works through the Senate. Andreessen argued it would make software development legally impossible for builders who can’t predict downstream misuse of their code.

The Proposed Developer Liability Debate

The liability issues were raised by Carole House, a former White House cybersecurity official, who said in an op-ed that software developers should be held more legally responsible for how their code is used, a precedent she said could expand beyond crypto into artificial intelligence.

Andreessen dismissed this analogy and compared it to blaming a hotel owner for a guest’s crime or an automobile manufacturer for a getaway car used in a robbery. Open-source developers are usually unpaid and can’t afford to take on legal risk, and unlimited downstream liability would be untenable for them, Dixon said, warning the effect would cascade through academic research, venture investing and eventually big companies.

The bill does not include the language in the CLARITY Act, and a fact sheet released by the Senate Banking Committee on the bill instead describes provisions protecting developers who do not hold customer funds from being considered money transmitters and securities-law liabilities related to compiling network transactions or providing computational work for distributed ledgers.

Ethics Provisions

When asked about remarks that the bill would financially benefit officials with crypto holdings, including the president and his family, Dixon said ethics rules should broadly apply across financial assets rather than targeting only crypto specifically. Andreessen added that the bill tightens the controls on officials’ crypto activity beyond what currently applies to stock trading.

Stablecoin Interest Fight

In the current version of the bill, Dixon said stablecoin issuers have agreed not to pay direct interest on balances of stablecoins, a compromise with the banking lobby which had warned there would be a flight of deposits from traditional banks. Reward-style incentives tied to transaction activity, such as credit-card rewards programmes, would continue to be allowed, he said.

Dixon said tokens would be regulated as securities by the SEC in their early, centralised stages and then by the CFTC once they reach a "sufficient decentralisation" threshold, which Bitcoin (BTC) and Ethereum (ETH) have already met under court rulings and regulatory decisions from both the Biden and Trump administrations.

The Industry’s Momentum

The bill's legislative timeline was not discussed in the interview. Industry leaders do not expect a floor vote before the August recess. This comes as Bitcoin’s price entered August in the $60,000 range, as many analysts are weary about the asset’s next leg up. On Stocktwits, retail sentiment around BTC remained in the ‘bearish’ zone, as chatter improved to ‘normal’ from ‘low’ levels over the past day. 

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