Why Does the Biden Administration Hate Bitcoin?

Author: Nik Hoffman, Bitcoin Magazine; Translator: Tao Zhu, Golden Finance

Over the past four years, President Biden has been noticeably reluctant to support the Bitcoin and cryptocurrency industry, as evidenced by his recent vetoes of major legislation and his administration's broader stance. On May 31, Biden vetoed a key bill that would have allowed highly trusted financial institutions to custody Bitcoin and other cryptocurrencies.

The bill received bipartisan support in both the House and Senate. The bill seeks to further integrate Bitcoin into the mainstream financial system by providing a regulatory framework that would allow banks and other financial institutions to safely hold digital assets. Supporters of the bill argue that such a framework would enhance the security of spot Bitcoin ETF funds, promote innovation, and help foster the development of the Bitcoin industry by distributing tokens that are currently held by only a few institutions. However, Biden's veto reflects his administration's lack of support for the industry, and the president has previously compared cryptocurrency traders to "rich tax evaders."

The Biden administration also published a report attacking Bitcoin and proof-of-work mining, instead promoting a central bank digital currency (CBDC), saying that “a U.S. CBDC has the potential to provide significant benefits.” Biden’s desire to embrace a CBDC, which would give the federal government complete control over its citizens’ finances, further demonstrates his true colors and reasons for not supporting Bitcoin.

Recently, Joe Biden’s Department of Justice arrested the founders of Samourai Wallet, a popular privacy Bitcoin mixing service, and charged them with money laundering. U.S. Senator Cynthia Loomis defended the Samourai founders, saying that “this position is contrary to existing Treasury guidance and common sense and violates the rule of law.” Famed whistleblower Edward Snowden also commented on the arrest:

In addition, the Democratic Party in general has also been reluctant to support legislation supporting Bitcoin. Key figures such as Senator Elizabeth Warren have been particularly outspoken against the cryptocurrency industry. Warren has frequently criticized cryptocurrencies for their environmental impact and regulatory challenges, and has said she is “building an anti-crypto army” to combat what she sees as the industry’s threats to financial stability and consumer protection.

In stark contrast, former President Donald Trump has recently begun to embrace Bitcoin and cryptocurrency. On June 1, 2024, Trump announced that his campaign would accept Bitcoin payments via the Lightning Network, which is facilitated by Bitcoin and Lightning infrastructure provider OpenNode. Trump recently stated that he “will ensure that the future of cryptocurrency and Bitcoin is made in America… I will support self-custody rights for 50 million cryptocurrency holders across the country.” Trump also recently said that he is "very positive and open to cryptocurrency companies" and that "our country has to be a leader in this space. There is no second place."

Despite this Democratic stance, the Bitcoin industry is becoming an increasingly influential force in American politics.Recent polls show that cryptocurrency voters are mostly nonpartisan, with no clear preference for either the Republican or Democratic Party. This group represents a sizable and growing portion of the electorate, with more than 50 million Bitcoin and cryptocurrency holders in the United States. As the 2024 presidential election approaches, Bitcoin policy is becoming a key issue for candidates to address.

Political leaders' evolving stances on Bitcoin and cryptocurrencies highlight the growing importance of these assets in shaping economic and regulatory policy.For Biden, his reluctance to embrace Bitcoin has alienated a significant portion of the electorate. Cryptocurrency advocates believe that a clear regulatory framework and mainstream acceptance of Bitcoin will drive economic growth, promote innovation, and enhance financial inclusion. However, the Biden administration's focus remains on preventing this from happening.

The rise of Bitcoin has breathed new life into the political landscape. While Bitcoin operates in a nonpartisan manner, appealing to individuals across the political spectrum, that doesn't mean all politicians will embrace it. Joe Biden and the Democratic Party are turning a nonpartisan technology into a partisan issue.

In summary, the Biden administration and most Democrats prefer CBDCs over decentralized cryptocurrencies like Bitcoin. CBDCs are more to Biden and the Democrats' liking than Bitcoin, which is less appealing to them as it doesn't help them achieve their ambitious authoritarian goals.

As the 2024 presidential election approaches, the role of Bitcoin policy in shaping voter preferences and political strategies is becoming increasingly apparent. With more than 50 million Bitcoin and cryptocurrency holders in the U.S., political leaders’ decisions on digital assets could play a key role in the upcoming election, reflecting Bitcoin’s growing importance in the broader economic and political landscape.