The U.S. Department of Justice (DOJ) announced the dissolution of its cryptocurrency unit on Monday, indicating a shift towards “narrowing” its enforcement efforts related to cryptocurrencies. This decision aligns with the executive order on digital assets issued by President Donald Trump in January, which aimed to foster “regulatory clarity and certainty” within the crypto sector.
Deputy Attorney General Todd Blanche communicated this change in a four-page memo to staff entitled “Ending Regulation by Prosecution,” declaring that the National Cryptocurrency Enforcement Team (NCET), established in 2022 under President Joe Biden, would be disbanded immediately.
“The Department of Justice is not a regulator of digital assets,” Blanche stated in the memo. “The previous administration utilized the DOJ to adopt a misguided approach of ‘regulation by prosecution,’ which was poorly conceived and executed. The DOJ will refrain from legal actions that impose regulatory frameworks on digital assets while the proper regulatory bodies manage these tasks outside of a punitive criminal justice context.”
Blanche informed his team that the DOJ will cease pursuing cases against cryptocurrency exchanges, mixing services, or offline wallets for actions taken by their users or inadvertent regulatory breaches. Employees were instructed not to bring charges related to regulatory violations in cases involving cryptocurrencies, including those pertaining to the Bank Secrecy Act (BSA) and unlicensed money transmission, as well as violations connected to federal securities and commodities laws.
Instead, the DOJ has directed its personnel to concentrate on “prosecuting individuals who exploit digital asset investors” or engage in criminal enterprises such as terrorism financing or gang-related activities.
“Ongoing investigations that conflict with these directives should be concluded,” Blanche wrote, specifying that he will collaborate with the DOJ’s criminal division to assess current cases for compliance with this new policy.
This disbandment of the NCET is not an isolated incident; it follows similar actions by other federal agencies, including the U.S. Commodity Futures Trading Commission (CFTC), which has diminished its specialized enforcement units, including a crypto-focused division, to streamline operations and avoid regulation through enforcement.
The NCET handled many significant crypto cases in recent years, including those involving the crypto mixer Tornado Cash and developer cases like that of Avi Eisenberg, who is set to be sentenced later this week after being found guilty of fraud and market manipulation.
This memo arrives just over a week after Trump granted pardons to the founders and senior executives of the cryptocurrency trading platform BitMEX, who had previously admitted guilt to charges under the Bank Secrecy Act.