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

Former economic advisors to the Biden administration, Ryan Cummings and Jared Bernstein, have penned an opinion piece for the New York Times, selectively recalling the decline of bitcoin's price from its 2025 peak as vindication of their administration's crypto policy. However, this narrative glosses over the most critical aspect of Biden-era crypto regulation: it was not based on a well-reasoned framework. The authors commend the Biden administration for its supposedly aggressive regulatory efforts to combat scams and fraud. Yet, this assertion is remarkable, given the events that transpired during their tenure. The cryptocurrency exchange FTX expanded exponentially under the Biden administration, with its founder, Sam Bankman-Fried, being a prominent Democratic donor who met with senior administration officials, including then-SEC Chair Gary Gensler, all while orchestrating one of the largest financial frauds in history. The administration's strategy of regulating through enforcement rather than establishing clear rules had a detrimental effect: law-abiding companies were forced offshore or out of business, consumers were harmed, and American innovation was stifled. Conversely, unscrupulous actors like Bankman-Fried, who were adept at navigating political circles, thrived in the resultant confusion. The absence of clear rules only benefits those who never intended to comply with them. The authors conveniently ignore one of the most troubling episodes of the Biden era: 'Operation Choke Point 2.0.' Under pressure from federal regulators, banks systematically debanked lawful crypto businesses, severing their access to the financial system without due process, formal rulemaking, or legislative authority. This debanking campaign ensnared ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's long-standing underservice of their needs. The Biden administration's approach disconnected consumers from tools they utilized to participate in the financial system, all without subjecting a single policy to the democratic process of notice-and-comment rulemaking. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use.' They acknowledge, in passing, that crypto is used for international money transfers but dismiss this as though facilitating rapid, low-cost cross-border remittances for millions of people is a trivial achievement. In reality, it is not. Global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars annually. Stablecoins operating on blockchain networks can execute the same transfers in minutes for a fraction of the cost, thereby providing an immediate, material financial improvement for families in developing countries. The Biden economists, having attended 'dozens of meetings,' apparently remained unimpressed. One wonders if they ever spoke with the people these tools serve. Beyond remittances, blockchain technology underpins a rapidly expanding ecosystem of financial applications. Prominent companies like Fidelity, JPMorgan, BlackRock, BNY Mellon, Morgan Stanley, Visa, Mastercard, Meta, Stripe, Block Inc., and Franklin Templeton are actively developing on blockchain infrastructure. The Biden economists' claim that no 'giant tech firms' are utilizing this technology is factually incorrect. The op-ed's news hook is the decline in bitcoin's price. Using short-term price fluctuations to condemn an entire asset class is analytically flawed. Amazon's stock fell 94% from its peak during the dot-com bust. By the Cummings-Bernstein standard, it should have been written off as 'fundamentally worthless.' Volatility is a characteristic of nascent markets, not proof of worthlessness. Furthermore, labeling the Bitcoin network as 'slow' overlooks its security – a quality that should be paramount to regulators. The Bitcoin network cannot be vetoed or reversed by outsiders or intermediaries, nor can user funds be unilaterally confiscated, or its distributed ledger tampered with. This is why it is used worldwide in areas where regular citizens are targeted by their governments. Meanwhile, other blockchains enable payments at breakneck speeds. The authors repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry. No serious policymaker or crypto participant has proposed such a thing. The stablecoin legislation Cummings and Bernstein reference creates fully reserved payment instruments that are overcollateralized with the most liquid government bonds on Earth. The Trump administration's bitcoin reserve proposal involves no new taxpayer expenditure. Meanwhile, when Silicon Valley Bank collapsed in 2023, the Biden administration authorized extraordinary measures to guarantee all deposits. Their concern about moral hazard seems highly selective. The op-ed devotes considerable space to crypto industry political donations, implying corruption. The suggestion that an industry advocating for favorable regulation through political participation is inherently corrupt would implicate 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. If political spending is problematic, the authors might start by examining their own side of the aisle during the Biden Administration, when Bankman-Fried overwhelmingly donated to Democrats. The Biden administration had a historic opportunity to establish the United States as the global leader in digital asset regulation: to write clear, fair rules that would protect consumers while allowing innovation to flourish on American soil. Instead, it 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. Cummings and Bernstein write that crypto's boosters 'have run out of excuses.' On the contrary, it is the Biden administration's crypto critics who owe the public an explanation.