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

The decline of bitcoin's price is being touted by former Biden economic advisers as a vindication of the administration's crypto policy. However, this claim is based on a selective memory that omits the most significant aspect of Biden-era crypto policy: it was not a thoughtful regulatory framework. The authors of a recent New York Times op-ed credit the Biden administration with 'aggressive regulatory efforts to curb scams and fraud,' but this assertion is misleading. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, had a devastating impact: legitimate businesses were driven offshore or out of business, consumers were harmed, and American innovation was stifled. Meanwhile, unscrupulous actors like Sam Bankman-Fried, who knew how to manipulate the system, thrived in the confusion. The authors conveniently ignore one of the most disturbing episodes of the Biden era: 'Operation Choke Point 2.0,' in which banks, under pressure from federal regulators, systematically debanked lawful crypto businesses without due process or legislative authority. This campaign affected not only businesses but also ordinary individuals and small businesses that had turned to crypto due to the traditional banking system's limitations. The Biden administration's approach cut consumers off from financial tools without following the democratic process of notice-and-comment rulemaking. The authors dismiss crypto as a 'slow and expensive database' with 'almost no practical use,' but this dismissal is misguided. Crypto enables fast, low-cost cross-border remittances, which is a significant achievement, especially for migrant workers and their families who are often charged exorbitant fees. Stablecoins running on blockchain networks can execute these transfers in minutes for a fraction of the cost, resulting in a substantial financial improvement for families in developing countries. Beyond remittances, blockchain technology supports a rapidly growing ecosystem of financial applications, with major companies like Fidelity, JPMorgan, and BlackRock 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, but this is an analytically flawed approach. Volatility is a characteristic of nascent markets, not proof of worthlessness. The Bitcoin network may be slow, but it makes up for this in security, a quality that should be paramount for regulators. The authors repeatedly invoke the straw man of a taxpayer-funded bailout of the crypto industry, but no serious policymaker has proposed this. 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. 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 instead to weaponize the banking system against a legal industry, creating a lose-lose-lose for innovation, consumer protection, and the U.S. crypto ecosystem.