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

A recent opinion piece by former Biden economic advisers Ryan Cummings and Jared Bernstein has sparked controversy by suggesting that the decline in bitcoin's price is a vindication of the administration's approach to cryptocurrency. However, this claim has been disputed as a masterclass in selective memory, omitting the most critical fact about Biden-era crypto policy: it was not a well-reasoned regulatory framework. The authors' assertion that the Biden administration increased regulatory efforts to curb scams and fraud is extraordinary, given the massive scale of FTX during their tenure. Sam Bankman-Fried, a top Democratic donor, met with senior administration officials while running one of the largest financial frauds in history. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a perverse effect: legitimate companies were driven 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. The debanking campaign swept up ordinary individuals and small businesses who had turned to crypto due to the traditional banking system's long-standing underservice. The Biden administration's approach cut consumers off from tools they were using to participate in the financial system without putting a single policy through the democratic process of notice-and-comment rulemaking. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use,' yet acknowledge its use in wiring money internationally. However, they wave this away as though enabling fast, low-cost cross-border remittances for millions of people is a trivial achievement. In reality, global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars each year. Stablecoins running on blockchain networks can execute the same transfers in minutes for a fraction of the cost, providing an immediate, material financial improvement for families in developing countries. Beyond remittances, blockchain technology underpins a rapidly growing ecosystem of financial applications, with major firms like Fidelity, JPMorgan, and BlackRock 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 no serious policymaker has proposed. The stablecoin legislation referenced creates fully reserved payment instruments that are overcollateralized with liquid government bonds. 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, seemingly selectively concerned about moral hazard. The op-ed devotes considerable space to crypto industry political donations, implying corruption. However, the suggestion that an industry advocating for favorable regulation through political participation is inherently corrupt would indict 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. 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.