The Real Consequences of Biden-Era Crypto Policy: A Legacy of Hostility

Biden's former economic advisors, Ryan Cummings and Jared Bernstein, have penned an opinion piece in The New York Times, claiming that the decline in bitcoin's price is proof that the administration's approach to cryptocurrency was correct. However, their argument relies on selective memory and omits crucial facts. The authors praise the administration's 'aggressive regulatory efforts to curb scams and fraud,' but this claim is misleading given the events that unfolded during their tenure. The Biden administration's strategy of 'regulation-by-enforcement' rather than establishing clear rules had severe consequences: legitimate businesses were forced offshore or out of business, consumers were harmed, and American innovation was stifled. Meanwhile, rogue actors like Sam Bankman-Fried, who was a top Democratic donor and met with senior administration officials, thrived in the confusion. The lack of clear rules allowed those who never intended to follow them to benefit. The authors conveniently ignore one of the most troubling episodes of the Biden era: 'Operation Choke Point 2.0,' where banks, under pressure from federal regulators, systematically debanked lawful crypto businesses without due process or legislative authority. This campaign harmed ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's shortcomings. The Biden administration's approach denied consumers access to financial tools without going 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.' However, they acknowledge that crypto is used for international money transfers, but downplay the significance of enabling fast, low-cost cross-border remittances for millions of people. In reality, global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars each year. Stablecoins on blockchain networks can execute the same transfers in minutes for a fraction of the cost, providing a significant financial improvement for families in developing countries. The Biden economists seemingly came away unimpressed after attending 'dozens of meetings,' but one wonders if they spoke to the people these tools serve. Beyond remittances, blockchain technology supports a rapidly growing ecosystem of financial applications, with major companies like Fidelity, JPMorgan, and BlackRock actively building on blockchain infrastructure. The authors' claim that no 'giant tech firms' are using this technology is incorrect. The op-ed's focus on bitcoin's price decline is analytically flawed, as using short-term price movements to condemn an entire asset class is unserious. The Bitcoin network may be slow, but it makes up for it in security, a quality that should be of utmost importance to regulators. The authors repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry, which no serious policymaker or crypto participant has proposed. The stablecoin legislation they reference creates fully reserved payment instruments that are overcollateralized with liquid government bonds. The authors imply that the crypto industry's political donations are corrupt, but this suggestion would indict virtually every sector of the American economy. The crypto industry turned to the political process as a last resort, a cornerstone of American democracy, after being denied a fair hearing by regulators. If political spending is problematic, the authors should examine their own side of the aisle, as Bankman-Fried overwhelmingly donated to Democrats during the Biden Administration. The Biden administration had the opportunity to establish the United States as the global leader in digital asset regulation but chose to weaponize the banking system against a legal industry, creating a lose-lose-lose for innovation, consumer protection, and the U.S. crypto ecosystem. It is the Biden administration's crypto critics who owe the public an explanation, not the industry's boosters.