The True Legacy of Biden's Crypto Policy: Regulation Through Hostility

The recent New York Times op-ed by former Biden economic advisers Ryan Cummings and Jared Bernstein attempts to rewrite history by downplaying the negative consequences of the administration's crypto policy. They claim that the decline in bitcoin's price is proof that their approach was correct, but this argument is based on selective memory and omission of key facts. The authors gloss over the fact that the Biden administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a devastating impact on legitimate crypto businesses and consumers. This approach allowed bad actors like Sam Bankman-Fried to thrive, while driving compliant companies out of business or offshore. The administration's actions, including 'Operation Choke Point 2.0,' which systematically debanked lawful crypto businesses, demonstrate a hostility towards the industry. The authors also dismiss the potential of cryptocurrency, describing it as a 'painfully slow and expensive database' with limited practical use. However, they fail to acknowledge the significant benefits of crypto, such as enabling fast and low-cost cross-border remittances, which can make a substantial difference to migrant workers and their families. Furthermore, they inaccurately claim that no major tech firms are using blockchain technology, when in fact, companies like Fidelity, JPMorgan, and Visa are actively building on blockchain infrastructure. The op-ed's criticism of bitcoin's price volatility is also misguided, as it is a natural feature of nascent markets. The authors' 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 measure. The Biden administration's actions, including the collapse of Silicon Valley Bank, demonstrate a selective concern for moral hazard. The op-ed's focus on crypto industry political donations implies corruption, but this is a cornerstone of American democracy. The Biden administration had the opportunity to establish the US as a leader in digital asset regulation but instead chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose for innovation, consumer protection, and the US crypto ecosystem.