The Real Consequences of Biden-Era Crypto Policy: A Legacy of Hostility

The claim by former Biden economic advisers Ryan Cummings and Jared Bernstein that the decline in bitcoin's price validates their administration's crypto policy is a prime example of selective memory. Their op-ed omits the most critical aspect of Biden-era crypto policy: it was not based on a well-reasoned regulatory framework. Instead, the administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a devastating impact: legitimate businesses were driven out of the country or out of business, consumers were harmed, and American innovation was stifled. Meanwhile, unscrupulous actors like Sam Bankman-Fried, who knew how to navigate the political landscape, thrived in the chaos. The absence of clear rules benefited only those who never intended to follow them. The authors conveniently overlook one of the most disturbing episodes of the Biden era: 'Operation Choke Point 2.0,' where banks, under pressure from federal regulators, systematically cut off lawful crypto businesses from the financial system without due process or legislative authority. This debanking campaign affected not only businesses but also ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's shortcomings. The Biden administration's approach severed consumers' access to financial tools without following the democratic process of notice-and-comment rulemaking. The authors dismiss cryptocurrency as a 'slow and expensive database' with 'almost no practical use,' acknowledging its use for international money transfers but downplaying its significance. However, enabling fast, low-cost cross-border remittances is a substantial achievement, especially considering that global remittance fees average nearly 6.5%, costing migrant workers and their families billions annually. Stablecoins on blockchain networks can execute these transfers in minutes at a fraction of the cost, providing a material financial improvement for families in developing countries. Beyond remittances, blockchain technology supports a rapidly growing ecosystem of financial applications, with major companies like Fidelity, JPMorgan, and Visa actively building on blockchain infrastructure. The claim that no 'giant tech firms' are using this technology is incorrect. The op-ed's focus on bitcoin's price decline to condemn the entire asset class is analytically weak. Using short-term price movements to judge an asset's worth is akin to writing off Amazon as 'fundamentally worthless' during the dotcom bust. Volatility is a characteristic of emerging markets, not proof of worthlessness. Moreover, labeling the Bitcoin network as 'slow' overlooks its security, a quality that should be paramount for regulators. The network's security features make it invaluable worldwide, especially in areas where citizens are targeted by their governments. The authors' invocation of a taxpayer-funded bailout of the crypto industry is a straw man; no serious policymaker has proposed such a thing. The stablecoin legislation they reference involves fully reserved, overcollateralized payment instruments, and the Trump administration's bitcoin reserve proposal does not require new taxpayer expenditure. In contrast, the Biden administration authorized measures to guarantee all deposits when Silicon Valley Bank collapsed, seemingly selectively concerned about moral hazard. The op-ed implies corruption due to crypto industry political donations, a suggestion that would implicate virtually every sector of the American economy. The crypto industry turned to political participation as a last resort, a cornerstone of American democracy, after being denied a fair hearing by regulators. If political spending is problematic, the authors should examine their own side's actions during the Biden Administration, including Bankman-Fried's significant donations to Democrats. The Biden administration had the opportunity to establish the United States as a global leader in digital asset regulation by creating clear, fair rules that would protect consumers and foster innovation. Instead, it 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. 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.