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

The claim by former Biden economic advisers that the decline in bitcoin's price vindicates their administration's crypto policy is a prime example of selective memory. Their op-ed conveniently glosses over the most significant fact about Biden-era crypto policy: it was characterized by hostility rather than a reasoned regulatory framework. The authors praise the administration's 'aggressive regulatory efforts' despite the fact that FTX, one of the largest financial frauds in history, grew under their watch. The strategy of regulation-by-enforcement, rather than establishing clear rules, had a perverse effect: legitimate companies were driven out, consumers were harmed, and American innovation was stifled. Meanwhile, bad actors thrived in the confusion. The administration's approach also included 'Operation Choke Point 2.0,' where banks systematically debanked lawful crypto businesses without due process, cutting them off from the financial system. This campaign harmed ordinary individuals and small businesses that had turned to crypto due to being underserved by the traditional banking system. The authors dismiss crypto as having 'almost no practical use,' ignoring its role in fast, low-cost cross-border remittances, which can significantly reduce the high fees paid by migrant workers. Blockchain technology is also being used by major firms like Fidelity, JPMorgan, and Visa, contradicting the claim that no 'giant tech firms' are using this technology. The op-ed's focus on short-term price movements to condemn crypto is analytically weak, as volatility is a feature of nascent markets. Moreover, labeling the Bitcoin network as 'slow' overlooks its security, a quality that should be paramount to regulators. The authors' invocation of a taxpayer-funded bailout of the crypto industry is a straw man, as no serious policymaker has proposed such a thing. The stablecoin legislation they reference involves fully reserved payment instruments that are overcollateralized with liquid government bonds. The Biden administration's decision to guarantee all deposits when Silicon Valley Bank collapsed in 2023, without expressing concern about moral hazard, highlights a double standard. The op-ed's implication that crypto industry political donations are corrupt would similarly indict virtually every sector of the American economy. The crypto industry turned to political participation as a last resort due to being denied a fair hearing by regulators. The Biden administration had the 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, resulting in a lose-lose-lose situation for innovation, consumer protection, and the U.S. crypto ecosystem.