DOJ Disbands Crypto Unit Amid Regulatory Shift
The U.S. Department of Justice (DOJ) announced a significant reduction in its cryptocurrency enforcement initiatives on Monday. This decision aligns with an executive order issued in January by U.S. President Donald Trump, which emphasized the need for “regulatory clarity and certainty” within the digital asset landscape. In a detailed four-page memo titled “Ending Regulation by Prosecution,” U.S. Deputy Attorney General Todd Blanche informed staff that the National Cryptocurrency Enforcement Team (NCET), established in 2022 during the Biden administration, would be disbanded effective immediately.
Blanche articulated in the memo, which was reviewed by CoinDesk, that “The Department of Justice is not a digital assets regulator.” He criticized the previous administration’s strategy of using the DOJ to implement a “reckless” approach of regulation through prosecution, describing it as ill-conceived and poorly executed. He emphasized that the DOJ would refrain from pursuing litigation or enforcement actions that inadvertently impose regulatory frameworks on digital assets, allowing President Trump’s designated regulators to handle these matters outside the punitive criminal justice system.
In a notable shift, Blanche instructed the DOJ staff to cease pursuing cases against cryptocurrency exchanges, mixing services, or offline wallets for actions involving their end users or any unintentional breaches of regulations. He further directed the staff not to charge regulatory violations in cases related to cryptocurrency, including those associated with the Bank Secrecy Act (BSA), unlicensed money transmission, and other federal securities and commodities law violations.
Instead, the DOJ’s focus will now pivot towards “prosecuting individuals who victimize digital asset investors” or those who utilize cryptocurrencies to facilitate criminal activities, such as terrorism financing or gang-related operations. Blanche urged that any ongoing investigations that do not align with this new directive should be closed. He also indicated that his office would collaborate with the DOJ’s criminal division to evaluate current cases for adherence to this updated policy.
This disbanding of NCET is not an isolated incident; it marks the latest development in a broader shift in federal regulatory efforts regarding cryptocurrencies since Trump took office. The U.S. Commodity Futures Trading Commission (CFTC) has also reduced several of its specialized enforcement teams, including one focused on cryptocurrency, to streamline operations and mitigate what they describe as “regulation by enforcement,” an initiative led by Acting Chair Caroline Pham.
NCET has been involved in several high-profile cryptocurrency cases over the past years, including actions against the crypto mixer Tornado Cash and its developers, as well as the case against Avi Eisenberg, the individual behind the Mango Markets exploitation, who is set to be sentenced later this week following his conviction for fraud and market manipulation.
This memo comes on the heels of President Trump’s recent pardon of the crypto trading platform BitMEX, along with its founders and senior executives, in response to their previous guilty pleas to charges related to the Bank Secrecy Act.
