The Misguided Legacy of Biden-Era Cryptocurrency Policy: A Recipe for Hostility

Former economic advisers to the Biden administration, 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. However, their narrative has been criticized for being selective and misleading. The authors claim that the Biden administration's regulatory efforts were 'increasingly aggressive' in curbing scams and fraud, but this assertion has been disputed. In reality, the administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a detrimental effect on the industry. Legitimate companies were driven out of business or offshore, while bad actors thrived in the confusion. The administration's approach also led to the debanking of lawful crypto businesses, cutting them off from the financial system without due process. The authors dismiss crypto as a 'painfully slow and expensive database' with limited practical use, but this assessment has been challenged. In reality, crypto has enabled fast and low-cost cross-border remittances, which have had a significant impact on the lives of millions of people. Furthermore, blockchain technology is being utilized by a growing number of major financial institutions, including Fidelity, JPMorgan, and BlackRock. The op-ed's criticism of crypto has been deemed 'analytically unserious' and overly focused on short-term price movements. The authors' invocation of the straw man of a taxpayer-funded bailout of the crypto industry has also been disputed. In contrast, the stablecoin legislation referenced in the op-ed creates fully reserved payment instruments that are overcollateralized with government bonds. The Biden administration's approach to crypto regulation has been criticized for being overly hostile and ineffective. Rather than establishing clear rules, the administration chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose situation for innovation, consumer protection, and the US crypto ecosystem.