The True Legacy of Biden-Era Crypto Policy: Regulation Through Hostility

Former Biden economic advisors Ryan Cummings and Jared Bernstein recently penned an opinion piece in The New York Times, claiming that the decline in bitcoin's price validates the administration's approach to cryptocurrency. However, their argument relies on selective memory, omitting crucial facts about the Biden-era crypto policy. The authors credit the Biden administration with aggressive regulatory efforts to curb scams and fraud, yet this framing is misleading, given the administration's track record. Under their watch, FTX grew exponentially, and Sam Bankman-Fried, a top Democratic donor, met with senior administration officials while running a massive financial fraud. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a detrimental 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 affected ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's limitations. The Biden administration's approach severed consumers' access to financial tools without following the democratic process of notice-and-comment rulemaking. The authors dismiss crypto as a 'painfully slow and expensive database' with 'almost no practical use.' However, they acknowledge that crypto is used for international wire transfers, downplaying the significance of enabling fast, low-cost cross-border remittances for millions of people. In reality, global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars each year. Stablecoins on blockchain networks can execute the same transfers in minutes for a fraction of the cost, providing a material financial improvement for families in developing countries. Beyond remittances, blockchain technology underpins a rapidly growing ecosystem of financial applications, with major companies like Fidelity, JPMorgan, and Visa actively building on blockchain infrastructure. The op-ed's claim that no 'giant tech firms' are using this technology is incorrect. The authors use bitcoin's price decline as a news hook, condemning the entire asset class based on short-term price movements. This approach is analytically flawed, as volatility is a feature of nascent markets, not proof of worthlessness. The Bitcoin network may be slow, but it prioritizes security, a quality that should be paramount to regulators. The authors invoke the straw man of a taxpayer-funded bailout of the crypto industry, which no serious policymaker has proposed. Meanwhile, the Biden administration authorized extraordinary measures to guarantee all deposits when Silicon Valley Bank collapsed in 2023, demonstrating selective concern 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 implicate virtually every sector of the American economy. 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.