Biden-Era Crypto Policy Left Industry in Regulatory Limbo, Critics Say

Former Biden economic advisers faced criticism for claiming vindication in cryptocurrency policy, with analysts arguing the administration’s enforcement-heavy approach harmed legitimate businesses while allowing fraudsters to thrive.

In a February 26 New York Times opinion piece, former Biden economic advisers Ryan Cummings and Jared Bernstein attributed bitcoin’s price decline from its 2025 peak as evidence supporting the previous administration’s cryptocurrency approach. However, critics argue the piece omits significant consequences of Biden-era crypto regulation.

The Biden administration pursued what industry observers characterized as “regulation-by-enforcement” rather than establishing clear regulatory rules. This strategy had unintended consequences that rippled through the sector.

Legitimate Companies Driven Out, Bad Actors Thrived

According to critics of the approach, compliance-minded cryptocurrency companies were forced offshore or out of business entirely. Meanwhile, bad actors like Sam Bankman-Fried, who ran FTX during the Biden administration, flourished in the regulatory confusion. Bankman-Fried was a top Democratic donor who met with senior administration officials, including then-Securities and Exchange Commission Chair Gary Gensler, while operating what became one of the largest financial frauds in history.

The lack of clear rules meant that only those willing to circumvent regulations benefited from the uncertainty, observers noted. Consumers were harmed and American innovation was stifled as a result.

Operation Choke Point 2.0 Targeted Crypto Businesses

A particularly controversial episode of the Biden era involved what critics called “Operation Choke Point 2.0.” Under pressure from federal regulators, banks systematically debanked lawful cryptocurrency businesses, cutting them off from the financial system without due process or formal rulemaking.

The debanking campaign swept up ordinary individuals and small businesses who had turned to cryptocurrency because the traditional banking system had underserved them. Critics argued the Biden administration cut consumers off from financial tools without putting any policy through the democratic process of notice-and-comment rulemaking.

Dismissing Practical Applications

The former advisers characterized cryptocurrency as a “painfully slow and expensive database” with “almost no practical use.” However, critics pointed to concrete applications being overlooked in this assessment.

Global remittance fees average nearly 6.5%, costing migrant workers and their families billions of dollars annually. Stablecoins running on blockchain networks can execute the same cross-border transfers in minutes for a fraction of the cost, providing immediate financial benefits to families in developing countries.

Beyond remittances, major financial institutions and technology companies are actively building on blockchain infrastructure. Fidelity, JPMorgan, BlackRock, BNY Mellon, Morgan Stanley, Visa, Mastercard, Meta, Stripe, Block Inc. and Franklin Templeton have all announced blockchain-related initiatives.

Bitcoin Security Features Underappreciated

Critics also challenged characterizations of Bitcoin as slow. While the network prioritizes security over speed, this design prevents external parties or intermediaries from vetoing transactions, unilaterally confiscating funds, or tampering with the distributed ledger.

This security feature explains Bitcoin’s adoption in areas where citizens face targeting by their own governments. Other blockchain networks offer faster transaction speeds for different use cases.

Concerns Over Moral Hazard Selectivity

The op-ed invoked concerns about taxpayer-funded crypto industry bailouts. However, critics noted no serious policymakers or crypto participants have proposed such measures. Stablecoin legislation creates fully reserved payment instruments overcollateralized with liquid government bonds.

Meanwhile, when Silicon Valley Bank collapsed in 2023, the Biden administration authorized extraordinary measures to guarantee all deposits, raising questions about the consistency of moral hazard concerns.

Political Donations and Industry Advocacy

The former advisers devoted considerable space to cryptocurrency industry political donations, implying corruption. Critics countered that virtually every sector of the American economy advocates for favorable regulation through political participation.

Denied a fair hearing by regulators, the crypto industry turned to the political process as a last resort. Notably, Sam Bankman-Fried predominantly donated to Democratic candidates during the Biden administration.

Missed Regulatory Opportunity

The Biden administration had an opportunity to establish the United States as a global leader in digital asset regulation by writing clear, fair rules protecting consumers while allowing innovation to flourish domestically, observers said. Instead, critics argue it chose to weaponize the banking system against a legal industry, creating negative outcomes for innovation, consumer protection, and the U.S. crypto ecosystem.

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