The U.S. Department of Justice is reducing its regulatory efforts in the cryptocurrency sector and dismantling its National Cryptocurrency Enforcement Team.
Established in 2022 under the Biden administration, NCET played a crucial role in prosecuting offenses related to cryptocurrency, including the landmark $4.3 billion settlement case against Binance and CEO Changpeng Zhao.
However, on April 7, deputy attorney general Todd Blanche communicated via an internal memo to DOJ staff, indicating that the team would be disbanded, and that ongoing investigations not meeting newly established criteria would be closed.
The DOJ will now refocus its efforts on crypto-related crimes linked to terrorism, drug trafficking, human trafficking, organized crime, and hacking. The memo explicitly directs prosecutors to halt cases against crypto exchanges, wallet providers, and mixing services like Tornado Cash based on user actions or unintentional regulatory breaches.
Furthermore, developers will not face prosecution for code misused by others, marking a significant victory for industry creators. Blanche criticized the previous administration’s strategy, labeling it “regulation by prosecution” and describing it as reckless.
The memo references a recent executive order from Trump that supports the necessity of accessing open blockchain networks without fear of repercussions. After actively engaging with the crypto community during the pre-election period, Trump has established personal ties to the industry through World Liberty Financial, where his family reportedly holds a 75% revenue share.
Blanche, a former defense attorney for Trump who was confirmed last month as the second-in-command at the DOJ, also advised prosecutors against pursuing securities, banking, or commodities law violations unless there is substantial evidence of intentional wrongdoing.
Not all members of the cryptocurrency community are pleased with the DOJ’s new direction. Critics argue that stepping back from proactive enforcement may lead to an increase in fraud, scams, and other criminal activities, raising concerns about whether a hands-off approach will enable malicious players to operate without restraint.