The Hidden Consequences of Biden's Crypto Policy: A Legacy of Hostility

The decline in bitcoin's price does not vindicate the Biden administration's approach to cryptocurrency, as two former economic advisers have claimed. Their New York Times opinion piece is criticized for its selective memory, omitting the most significant fact about Biden-era crypto policy: it was not a well-reasoned regulatory framework. The authors praise the administration's efforts to curb scams and fraud, but this claim is disputed, given the massive scale of FTX during the Biden administration and the fact that its founder, Sam Bankman-Fried, was a top Democratic donor who met with senior administration officials while running a major financial fraud. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a perverse effect: legitimate companies 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 also ignore the troubling episode of 'Operation Choke Point 2.0,' where 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 cut consumers off from tools they were using to participate in the financial system without putting a single policy through the democratic process. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use,' but this claim is disputed, as crypto is used to wire money internationally, enabling fast, low-cost cross-border remittances for millions of people. The Biden economists' claim that no 'giant tech firms' are using blockchain technology is also flatly wrong, as many major companies are actively building on blockchain infrastructure. The op-ed's news hook is bitcoin's price decline, but using short-term price movements to condemn an entire asset class is analytically unserious. The authors label the Bitcoin network as 'slow,' but it makes up for this in security, a quality that should be of the utmost importance to regulators. The authors repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry, but no serious policymaker has proposed this. The stablecoin legislation creates fully reserved payment instruments that are overcollateralized with liquid government bonds. The authors imply corruption due to crypto industry political donations, but this is a cornerstone of American democracy. The Biden administration had a historic 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.