The True Legacy of Biden-Era Crypto Policy: Regulation Through Hostility

The recent New York Times opinion piece by former Biden economic advisers Ryan Cummings and Jared Bernstein presents a skewed view of the decline in bitcoin's price, attributing it to the administration's approach to cryptocurrency regulation. However, this perspective overlooks the most critical aspect of Biden-era crypto policy: its lack of a coherent regulatory framework. The authors commend the administration for its 'aggressive regulatory efforts to curb scams and fraud,' yet this assertion is misleading given the events that transpired during their tenure. The rise of FTX, one of the largest financial frauds in history, occurred under their watch, with its founder, Sam Bankman-Fried, being a top Democratic donor who met with senior administration officials. The administration's strategy of 'regulation by enforcement' rather than establishing clear rules had a detrimental effect: legitimate businesses were driven offshore or out of business, consumers were harmed, and American innovation was stifled, while bad actors like Bankman-Fried thrived in the confusion. 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. This debanking campaign affected not only businesses but also ordinary individuals who had turned to crypto due to the traditional banking system's shortcomings. The administration's approach severed consumers' access to financial tools without undergoing the democratic process of notice-and-comment rulemaking. Cummings and Bernstein dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use.' However, they acknowledge its use in international money transfers, downplaying the significance of enabling fast, low-cost cross-border remittances that benefit millions. Global remittance fees average nearly 6.5%, costing migrant workers and their families billions annually. Stablecoins on blockchain networks can execute the same transfers in minutes for a fraction of the cost, providing a material financial improvement for families in developing countries. Beyond remittances, blockchain technology supports a growing ecosystem of financial applications, with major firms like Fidelity, JPMorgan, and Visa actively building on blockchain infrastructure. The op-ed's claim that no 'giant tech firms' are using this technology is incorrect. The authors use bitcoin's price decline as a news hook, condemning the entire asset class based on short-term price movements, which is analytically flawed. The Bitcoin network's security, which makes it invaluable for regulators, is overlooked in favor of criticisms about its speed. Other blockchains enable payments at high speeds, balancing security and efficiency. The repeated invocation of a taxpayer-funded bailout of the crypto industry is a straw man; no serious policymaker has proposed such a measure. The stablecoin legislation referenced creates fully reserved payment instruments overcollateralized with liquid government bonds, and the Trump administration's bitcoin reserve proposal involves no new taxpayer expenditure. In contrast, the Biden administration guaranteed all deposits when Silicon Valley Bank collapsed in 2023, showcasing selective concern about moral hazard. The op-ed implies corruption due to crypto industry political donations, a stance that would implicate virtually every sector of the American economy. The crypto industry turned to political participation as a last resort, 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 instead chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose scenario for innovation, consumer protection, and the U.S. crypto ecosystem. It is not the crypto boosters who have run out of excuses, but rather the Biden administration's crypto critics who owe the public an explanation.