The Unintended Consequences of Biden's Crypto Policy: A Legacy of Hostility

The decline of bitcoin's price does not vindicate the Biden administration's approach to cryptocurrency, as two former economic advisers have suggested. Their recent opinion piece in The New York Times is a prime example of selective memory, omitting the most critical fact about Biden-era crypto policy: it was not a well-reasoned regulatory framework. The administration's strategy of regulation-by-enforcement had a perverse effect, driving legitimate companies offshore or out of business, harming consumers, and stifling American innovation. Meanwhile, bad actors thrived in the confusion. The administration's approach to crypto regulation was marked by hostility, with the notorious 'Operation Choke Point 2.0' being a prime example. This campaign saw banks systematically debanking lawful crypto businesses, cutting them off from the financial system without due process or legislative authority. The authors of the op-ed dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use.' However, they fail to acknowledge the significant benefits of crypto, including fast and low-cost cross-border remittances, which can be a lifesaver for migrant workers and their families. The Biden economists' claim that no major tech firms are using blockchain technology is also incorrect, as many prominent companies are actively building on blockchain infrastructure. The op-ed's focus on short-term price movements to condemn an entire asset class is analytically flawed. The Bitcoin network may be slow, but it makes up for it in security, a quality that should be of utmost importance to regulators. The authors' repeated invocation of the straw man of a taxpayer-funded bailout of the crypto industry is also misleading, as no serious policymaker has proposed such a thing. The stablecoin legislation they reference creates fully reserved payment instruments that are overcollateralized with liquid government bonds. The op-ed's attempt to imply corruption through crypto industry political donations is also unfounded, as the industry's advocacy for favorable regulation through political participation is a cornerstone of American democracy. The Biden administration had a historic opportunity to establish the United States as a global leader in digital asset regulation but chose to weaponize the banking system against a legal industry, creating a lose-lose-lose for innovation, consumer protection, and the U.S. crypto ecosystem.