In a significant move that reshapes the landscape of cryptocurrency enforcement in the United States, the U.S. Department of Justice (DOJ) announced on Monday the disbandment of its National Cryptocurrency Enforcement Team (NCET). This decision aligns with President Donald Trump’s January executive order aimed at providing” regulatory clarity and certainty” for the burgeoning crypto industry.
U.S. Deputy Attorney General Todd Blanche communicated this directive in a comprehensive four-page memo titled “Ending Regulation by Prosecution.” He emphasized that the DOJ would redirect its focus away from the controversial practice of regulation by prosecution, which he critiqued as poorly conceived and executed under the previous administration.
“The Department of Justice is not a digital assets regulator,” Blanche asserted, making it clear that the intent moving forward is to avoid superimposing regulatory frameworks through litigation. The memo indicated that the DOJ will no longer engage in enforcement actions against cryptocurrency exchanges or mixed services for incidental acts committed by their users, nor will they pursue cases for unwitting regulatory violations.
Moreover, Blanche stipulated that the DOJ’s resources would now be directed towards prosecuting individuals who exploit digital asset investors or use cryptocurrency to facilitate criminal activities, such as terrorism or gang financing. This marks a notable pivot in priorities, with enforcement efforts zeroing in on protecting the integrity of investors rather than enforcing regulatory compliance.
Blanche’s memo directed staff to conclude ongoing investigations that do not align with this refined focus, coordinating with the criminal division of the DOJ to ensure consistency in handling cases moving forward.
This change in approach is not isolated; it follows actions taken by the U.S. Commodity Futures Trading Commission (CFTC), which also cut down on specialized crypto enforcement teams amidst a broader strategy to eliminate regulation by enforcement.
The NCET had been involved in several high-profile cases, including actions against the crypto mixer Tornado Cash. With its disbandment, the future of how crypto-related offenses are prosecuted in the U.S. remains to be seen.
Blanche’s memo surfaces shortly after President Trump pardoned the founders of the crypto trading platform BitMEX, shedding light on a new regulatory climate that could have profound implications for the industry as it strives for legitimacy and structure.
