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

The Biden administration's former economic advisers, Ryan Cummings and Jared Bernstein, have penned an opinion piece for The New York Times, arguing that the decline in bitcoin's price is a vindication of their administration's approach to cryptocurrency regulation. However, this argument relies on selective memory and glosses over the actual consequences of the administration's policies. The authors claim that the Biden administration took an 'aggressive regulatory approach' to curb scams and fraud, but this framing is misleading given the events that transpired during their tenure. The rise of FTX, one of the largest financial frauds in history, occurred under their watch, and its founder, Sam Bankman-Fried, was a top Democratic donor who met with senior administration officials. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a devastating impact: legitimate companies were forced offshore or out of business, consumers were harmed, and American innovation was stifled. Meanwhile, bad actors like Bankman-Fried thrived in the confusion. The authors conveniently ignore one of the most troubling episodes of the Biden era: 'Operation Choke Point 2.0,' where banks systematically debanked lawful crypto businesses, cutting them off from the financial system without due process or legislative authority. The Biden administration's approach to crypto regulation was marked by hostility, and its consequences were far-reaching. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use,' but this dismissal is misguided. Crypto has enabled fast, low-cost cross-border remittances for millions of people, which is a significant achievement. Stablecoins running on blockchain networks can execute transfers in minutes for a fraction of the cost, providing a material financial improvement for families in developing countries. The Biden economists' claim that no 'giant tech firms' are using blockchain technology is flatly wrong, as numerous 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 repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry, which is not a serious proposal. The stablecoin legislation referenced creates fully reserved payment instruments that are overcollateralized with liquid government bonds. 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.