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

The claim by former Biden economic advisors Ryan Cummings and Jared Bernstein that the decline in bitcoin's price is a vindication of the administration's crypto policy has been labeled as a masterclass in selective memory. Their op-ed in the New York Times glosses over the fact that the Biden administration's approach to cryptocurrency was not based on a well-reasoned regulatory framework, but rather on aggressive enforcement that led to the decline of legitimate businesses and the rise of fraudulent actors like Sam Bankman-Fried. The administration's strategy of regulating through enforcement rather than establishing clear rules had a devastating impact on the industry, driving companies offshore or out of business, harming consumers, and stifling American innovation. The authors of the op-ed conveniently ignore the 'Operation Choke Point 2.0' episode, in which banks systematically debanked lawful crypto businesses under pressure from federal regulators, cutting them off from the financial system without due process. The Biden administration's approach to crypto has been criticized for its lack of clear rules, its failure to protect consumers, and its stifling of innovation. The authors' dismissal of crypto as a 'painfully slow and expensive database' with 'almost no practical use' has been disputed, as crypto has been shown to have numerous practical applications, including fast and low-cost cross-border remittances. The Biden economists' claim that no major tech firms are using blockchain technology has been proven wrong, as numerous companies, including Fidelity, JPMorgan, and Visa, are actively building on blockchain infrastructure. The op-ed's use of short-term price movements to condemn the entire asset class has been labeled as analytically unserious, and its characterization of the Bitcoin network as 'slow' has been disputed, as the network's security is a key feature that makes it attractive to users. The authors' invocation of the straw man of a taxpayer-funded bailout of the crypto industry has been disputed, as no serious policymaker has proposed such a thing. The Biden administration's authorization of extraordinary measures to guarantee all deposits when Silicon Valley Bank collapsed in 2023 has been cited as an example of selective concern about moral hazard. The op-ed's focus on crypto industry political donations has been labeled as an attempt to imply corruption, but the authors' own side of the aisle has been accused of hypocrisy, given Bankman-Fried's significant donations to Democrats. The Biden administration's approach to crypto has been criticized for its failure to establish clear, fair rules that would protect consumers while allowing innovation to flourish. Instead, the administration chose to weaponize the banking system against a legal industry, creating a lose-lose-lose situation for innovation, consumer protection, and the US crypto ecosystem.