Crypto Policy Under Biden: A Legacy of Hostility and Misguided Regulation

Former economic advisers 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 the administration's crypto policy. However, this assertion has been met with criticism, as it is argued that the administration's approach was not based on a reasoned regulatory framework, but rather a strategy of regulation-by-enforcement. This approach had a detrimental effect on legitimate businesses, driving them offshore or out of business, while allowing bad actors to thrive. The authors of the op-ed have been accused of selective memory, omitting key facts about the Biden-era crypto policy, including the growth of FTX during this time and the 'Operation Choke Point 2.0' episode, which saw lawful crypto businesses being systematically debanked by banks under pressure from federal regulators. The op-ed also dismisses crypto as having 'almost no practical use', despite its ability to facilitate fast and low-cost cross-border remittances, which is a significant improvement for families in developing countries. Furthermore, the authors' claim that no major tech firms are using blockchain technology is incorrect, as many prominent companies are actively building on blockchain infrastructure. The use of short-term price movements to condemn an entire asset class is also seen as analytically unserious. The Bitcoin network's security features, which make it an attractive option for users in areas where governments target citizens, are also overlooked. The authors' repeated invocation of the straw man of a taxpayer-funded bailout of the crypto industry is also seen as misleading, as no serious policymaker has proposed such a thing. The stablecoin legislation referenced in the op-ed creates fully reserved payment instruments that are overcollateralized with liquid government bonds, and the Trump administration's bitcoin reserve proposal involves no new taxpayer expenditure. The Biden administration's authorization of extraordinary measures to guarantee all deposits during the Silicon Valley Bank collapse in 2023 is also seen as an example of selective concern about moral hazard. The op-ed's focus on crypto industry political donations implies corruption, but this is seen as a cornerstone of American democracy, and the suggestion that an industry advocating for favorable regulation through political participation is inherently corrupt would indict virtually every sector of the American economy. The Biden administration had the opportunity to establish the United States as a global leader in digital asset regulation but instead 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.