Biden's Crypto Legacy: Regulation Through Hostility

The recent New York Times op-ed by former Biden economic advisers Ryan Cummings and Jared Bernstein attempts to vindicate the administration's approach to cryptocurrency by citing the decline in bitcoin's price. However, this argument relies on selective memory and omits crucial facts. The Biden administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had severe consequences. Legitimate companies were driven out of business or offshore, consumers were harmed, and innovation was stifled. Meanwhile, fraudulent actors like Sam Bankman-Fried thrived in the regulatory confusion. The administration's actions, such as 'Operation Choke Point 2.0,' resulted in the debanking of lawful crypto businesses without due process or legislative authority. This approach cut off consumers from financial tools and undermined the democratic process. The authors' dismissal of crypto as a 'painfully slow and expensive database' with 'almost no practical use' is misleading. Crypto enables fast, low-cost cross-border remittances, which is a significant achievement that benefits millions of people. The Biden economists' 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 cryptocurrency is analytically flawed. The Bitcoin network's security is a critical feature that should be prioritized by regulators. The authors' invocation of a taxpayer-funded bailout of the crypto industry is a straw man, as no serious policymaker has proposed such a measure. The Biden administration's concerns about moral hazard seem selective, given their authorization of extraordinary measures to guarantee deposits during the Silicon Valley Bank collapse. The op-ed's implication that the crypto industry's political donations are corrupt is unfounded, as political participation is a cornerstone of American democracy. The Biden administration had the opportunity to establish the United States as a leader in digital asset regulation but instead chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose for innovation, consumer protection, and the U.S. crypto ecosystem.