The Biden Administration's Crypto Policy: A Legacy of Hostility and Confusion

The Biden administration's former economic advisers, Ryan Cummings and Jared Bernstein, have penned an opinion piece in The New York Times, arguing that the decline in bitcoin's price is a vindication of their administration's crypto policy. However, this claim has been met with criticism, with some arguing that it is a masterclass in selective memory, omitting the most consequential fact about Biden-era crypto policy: it was not a reasoned regulatory framework. The authors credit the Biden administration with 'increasingly aggressive regulatory efforts to curb scams and fraud,' but this framing is extraordinary, given the events that transpired during their watch. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a perverse effect: legitimate, compliance-minded companies were driven offshore or out of business, consumers were harmed, and American innovation was stifled. Meanwhile, bad actors like Sam Bankman-Fried thrived in the confusion. The authors conveniently ignore one of the most troubling episodes of the Biden era: the systematic debanking of lawful crypto businesses by banks under pressure from federal regulators. This debanking campaign cut off ordinary individuals and small businesses from the financial system without due process, formal rulemaking, or legislative authority. 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 of notice-and-comment rulemaking. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use.' However, they acknowledge in passing that crypto is used to wire money internationally, but wave this away as though enabling fast, low-cost cross-border remittances for millions of people is a trivial achievement. In reality, global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars each year. Stablecoins running on blockchain networks can execute the same transfers in minutes for a fraction of the cost, providing an immediate, material financial improvement for families in developing countries. Beyond remittances, blockchain technology underpins a rapidly growing ecosystem of financial applications, with major firms like Fidelity, JPMorgan, and BlackRock actively building on blockchain infrastructure. The Biden economists' claim that no 'giant tech firms' are using this technology is flatly wrong. 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 repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry, but no serious policymaker has proposed anything of the sort. The stablecoin legislation referenced creates fully reserved payment instruments that are overcollateralized with the most liquid government bonds on Earth. Meanwhile, when Silicon Valley Bank collapsed in 2023, the Biden administration authorized extraordinary measures to guarantee all deposits, raising questions about their concern for moral hazard. The op-ed devotes considerable space to crypto industry political donations, implying corruption, but the suggestion that an industry advocating for favorable regulation through political participation is inherently corrupt would indict virtually every sector of the American economy. Denied a fair hearing by regulators, 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 the global leader in digital asset regulation, but instead 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.