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

The recent op-ed by Ryan Cummings and Jared Bernstein in The New York Times attempts to rewrite history by downplaying the detrimental effects of the Biden administration's approach to cryptocurrency. Their argument that the decline in bitcoin's price validates their administration's strategy is a prime example of selective memory. In reality, the Biden administration's policy was characterized by a lack of clear regulations, instead opting for a 'regulation-by-enforcement' approach that had severe consequences. The rise of FTX, which became one of the largest financial frauds in history, occurred under their watch, with its founder, Sam Bankman-Fried, having close ties to senior administration officials. This approach had a devastating impact on legitimate businesses, driving them offshore or out of business, while harming consumers and stifling American innovation. The 'Operation Choke Point 2.0' episode, where banks systematically debanked lawful crypto businesses without due process, is a disturbing example of the administration's actions. The authors' dismissal of crypto as a 'painfully slow and expensive database' with 'almost no practical use' is also misguided. They overlook the significant benefits of blockchain technology, such as enabling fast and low-cost cross-border remittances, which can greatly improve the lives of millions of people. Moreover, their claim that no major tech firms are utilizing blockchain technology is incorrect, as numerous prominent companies are actively building on blockchain infrastructure. The op-ed's focus on short-term price movements to condemn the entire asset class is analytically flawed. The Bitcoin network's security features, such as its resistance to intermediaries and tampering, make it an attractive option for individuals in areas where governments target citizens. The authors' repeated invocation of a taxpayer-funded bailout of the crypto industry is a straw man, as no serious policymaker has proposed such a measure. The stablecoin legislation they reference creates fully reserved payment instruments that are overcollateralized with liquid government bonds. The Biden administration's concern about moral hazard is selective, as they authorized extraordinary measures to guarantee all deposits when Silicon Valley Bank collapsed in 2023. The op-ed's emphasis on crypto industry political donations implies corruption, but this is a double standard, as every sector of the American economy engages in political participation. The crypto industry turned to the political process as a last resort, a cornerstone of American democracy. The Biden administration had a historic 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, resulting in a lose-lose-lose situation for innovation, consumer protection, and the U.S. crypto ecosystem.