The Biden Era's Crypto Policy: A Legacy of Hostility and Misregulation

The decline of bitcoin's price has been cited by former Biden economic advisers as evidence of the effectiveness of their administration's crypto policy. However, this claim has been disputed as a selective interpretation of events. Despite the administration's claims of aggressive regulatory efforts to curb scams and fraud, the reality is that their approach was marked by a lack of clear rules, which had a devastating impact on legitimate businesses and consumers. The administration's strategy of regulation-by-enforcement allowed bad actors to thrive, while driving compliant companies out of business or offshore. The episode of 'Operation Choke Point 2.0' is a notable example, where banks were pressured by federal regulators to systematically debank lawful crypto businesses without due process. This approach not only harmed consumers but also stifled American innovation. The authors of the op-ed have been criticized for dismissing the potential of cryptocurrency, describing it as a 'painfully slow and expensive database' with limited practical use. However, this overlooks the significant benefits of crypto in enabling fast and low-cost cross-border remittances, which can have a substantial impact on the lives of migrant workers and their families. Moreover, the claim that no major tech firms are using blockchain technology is incorrect, as numerous prominent companies are actively building on blockchain infrastructure. The op-ed's focus on short-term price movements to condemn the entire asset class is also seen as analytically flawed. The Bitcoin network's security features, which make it an attractive option for users in areas where governments target citizens, have been overlooked. The authors' repeated invocation of the straw man of a taxpayer-funded bailout of the crypto industry is also misleading, as no serious policymaker has proposed such a measure. The stablecoin legislation and bitcoin reserve proposal referenced in the op-ed are designed to create fully reserved payment instruments that are overcollateralized with liquid government bonds, without requiring new taxpayer expenditure. The Biden administration's decision to guarantee all deposits when Silicon Valley Bank collapsed in 2023 has been cited as an example of selective concern about moral hazard. The op-ed's implication that the crypto industry's political donations are corrupt is also seen as unfair, as the industry has been forced to turn to the political process as a last resort due to being denied a fair hearing by regulators. Ultimately, the Biden administration's approach to crypto policy has been criticized for failing to establish clear, fair rules that would protect consumers while allowing innovation to flourish in the US.