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

Former economic advisors to the Biden administration, Ryan Cummings and Jared Bernstein, have penned an opinion piece in the New York Times, claiming that the decline in bitcoin's price is a vindication of their administration's crypto policy. However, this assertion has been criticized for being a prime example of selective memory, as it conveniently glosses over the most significant consequence of Biden-era crypto policy: the lack of a well-reasoned regulatory framework. The authors' attempt to credit the Biden administration with 'aggressive regulatory efforts to curb scams and fraud' rings hollow, given the fact that FTX, one of the largest financial frauds in history, thrived during their watch. The administration's strategy of 'regulation-by-enforcement' had far-reaching and devastating effects, driving legitimate businesses offshore or out of business, harming consumers, and stifling American innovation. Meanwhile, unscrupulous actors like Sam Bankman-Fried, who was well-versed in playing the political game, flourished in the resulting chaos. The authors' op-ed also ignores one of the most disturbing episodes of the Biden era: 'Operation Choke Point 2.0,' in which banks, under pressure from federal regulators, systematically debanked lawful crypto businesses without due process or legislative authority. This campaign had a disproportionate impact on ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's long history of underserving them. The Biden administration's approach effectively cut off consumers from the tools they needed to participate in the financial system, all without putting a single policy through the democratic process of notice-and-comment rulemaking. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use,' but this assessment is at odds with the reality that crypto is being used to facilitate fast, low-cost cross-border remittances for millions of people. The global remittance market is plagued by exorbitant fees, with the average cost of sending money internationally approaching 6.5%. Stablecoins, which utilize blockchain technology, can execute the same transfers in a matter of minutes for a fraction of the cost, resulting in a significant financial improvement for families in developing countries. Beyond remittances, blockchain technology is underpinning a rapidly expanding ecosystem of financial applications, with major companies such as Fidelity, JPMorgan, and BlackRock actively building on blockchain infrastructure. The authors' claim that no 'giant tech firms' are utilizing this technology is patently false. The op-ed's focus on bitcoin's price decline as a means of condemning the entire asset class is analytically flawed. Using short-term price movements to pass judgment on an entire market is a misguided approach, as evidenced by the fact that Amazon's stock fell by 94% from its peak during the dotcom bust. The Bitcoin network may lack speed, but it makes up for this with its robust security features, which should be of paramount importance to regulators. The network's decentralized nature ensures that transactions between peers cannot be unilaterally vetoed or reversed, and user funds cannot be confiscated or tampered with. This is precisely why it is used worldwide in areas where regular citizens are targeted by their governments. The authors repeatedly invoke the specter of a taxpayer-funded bailout of the crypto industry, but this is a straw man argument, as no serious policymaker or crypto participant has proposed such a measure. The stablecoin legislation referenced by Cummings and Bernstein creates fully reserved payment instruments that are overcollateralized with liquid government bonds, while the Trump administration's bitcoin reserve proposal involves no new taxpayer expenditure. In contrast, when Silicon Valley Bank collapsed in 2023, the Biden administration authorized extraordinary measures to guarantee all deposits, seemingly without concern for moral hazard. The op-ed devotes considerable space to crypto industry political donations, implying corruption, but this suggestion is unfounded. The crypto industry's advocacy for favorable regulation through political participation is a cornerstone of American democracy, and to imply that it is inherently corrupt would be to indict virtually every sector of the American economy. Denied a fair hearing by regulators, the crypto industry turned to the political process as a last resort. If political spending is problematic, the authors might start by examining their own side of the aisle during the Biden Administration, when Bankman-Fried overwhelmingly donated to Democrats. The Biden administration had a historic opportunity to establish the United States as the global leader in digital asset regulation, but instead, it chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose for innovation, consumer protection, and the U.S. crypto ecosystem. Cummings and Bernstein claim that crypto's boosters 'have run out of excuses,' but it is actually the Biden administration's crypto critics who owe the public an explanation.