Biden’s Regulatory Onslaught Takes Aim at Cryptocurrency

Posted on Thursday, April 18, 2024
by Andrew Shirley



In light of runaway government spending devaluing the U.S. Dollar at a record pace, some financial experts have pointed to Bitcoin and other cryptocurrencies as a potential way for Americans to free their wealth from the consequences of poor fiscal policy. But the Biden administration is increasingly waging a whole-of-government war on crypto to bring the system under the control of federal regulators.

According to a report published on April 12 by the American Institute for Economic Research (AIER), the latest assault by the Biden administration on crypto has come in the form of an “environmental impact survey” from Biden’s Department of Energy. After the department’s initial “emergency survey” was blocked by a lawsuit, the agency is now pursuing a slower process to supposedly examine the environmental impacts of cryptocurrency.

This move is just the latest sign of hostility from the Biden administration toward cryptocurrency. As AIER also reports, Biden’s Securities and Exchange Commission (SEC) “attempted to shut down digital assets and exchanges for registration violations in a move that may exceed the SEC’s authority, even while the crypto entities in question have been widely utilized with no fraud alleged.”

As part of Biden’s 2021 infrastructure law, Democrats in Congress also inserted language that may leave individual crypto “miners” (the entities who verify transactions on Bitcoin and other cryptocurrency networks) subject to burdensome reporting mandates that would severely hamper the functionality of crypto systems.

A year later, Biden signed an executive order requiring cryptocurrency producers to “report their energy use” to better comply with the administration’s “climate change objectives.” Bitcoin and many other cryptocurrency networks are extremely energy intensive, and industry leaders felt this was a clear attempt to target the industry via climate change mandates.

The Biden administration has also attempted several times to add a 30 percent tax on electricity used in crypto mining via the “Digital Asset Mining Energy (DAME) tax” into the 2024 Federal Budget. After heavy pushback, the effort was scuttled.

A sizable majority of Democrats in Congress – joined by some Republicans – have also sought to implement more government controls over Bitcoin and other cryptocurrencies.

Senator Elizabeth Warren (D-MA), for instance, has attempted multiple times to pass legislation giving the government more power to regulate cryptocurrency exchanges. To that end, in 2022, she introduced, with Senator Roger Marshall (R-KS), the “Digital Asset Anti-Money Laundering Act.” The measure would have given the federal government new and comprehensive powers to investigate and regulate the entire industry. Though the bill was defeated, she remains an outspoken critic of crypto.

Warren and Biden have consistently blasted cryptocurrency as a tool for money laundering, financing terrorism, and funding other black-market activities. In April, Treasury Department Deputy Secretary Wally Adeyemo asked the Senate Banking Committee for “wider powers” to crack down on crypto financing. His contention was that cryptocurrencies permit bad actors to funnel money to rogue nations like Iran. Adeyemo stated during the hearing, “We fear that without congressional action to provide us with necessary tools, the use of virtual assets by these actors will only grow.”

But as crypto advocates have warned, excessive government regulation of cryptocurrencies would undermine the monetary system’s independence from government economic policies. Because cryptocurrency is exchanged and stored on a decentralized digital ledger known as a “blockchain,” it does not require a large bureaucratic apparatus or banking institution to manage it. It stands independent of the systems that have in the past led to financial panics and downturns.

Critics of Democrat efforts to regulate cryptocurrency have argued that liberals are more interested in destroying the independence of crypto from government authority than actually stopping illicit activities. They believe that the left fears crypto could liberate everyday people from having their financial security tied to government policy.

Republicans wary of Biden’s efforts to regulate crypto have also argued that Democrats could use government power to target conservatives, much as the Obama Department of Justice did through its infamous “Operation Choke Point.” On paper, the objective of that operation was to investigate banks that “handled payments” for clients that the administration deemed to be “high risk.” But in reality, Obama’s DOJ used the operation as an excuse to target the administration’s political enemies by pressuring banks to terminate accounts and “debank” individuals and groups the Obama administration found objectionable.

The crypto issue could become more prominent in the presidential campaign with less than seven months to go until November. While Biden has established himself as an enemy of crypto’s independence, former President Donald Trump has already signaled potential support for bringing Bitcoin into the mainstream.

Moreover, according to a January Politico report, “GOP lawmakers and conservative groups have drafted regulatory proposals in line with the industry’s wish list.” House Majority Whip Tom Emmer (R-MN), a leading crypto advocate, has said, “If the second Trump administration takes place, the president will be a lot more friendly to the crypto industry.”

While crypto likely won’t be a deciding issue for many voters, it could become just one more reason for Americans concerned about their financial future to vote against Biden this fall.

Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.

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