The U.S. Justice Department has abruptly disbanded its National Cryptocurrency Enforcement Team, marking a significant shift in how the federal government handles crypto-related crimes. According to a memo sent by Deputy Attorney General Todd Blanche, U.S. attorney’s offices will now take the lead on digital asset cases, focusing primarily on crimes involving terrorism.
New Focus and Priorities
The department’s efforts will now concentrate on prosecuting individuals who victimize digital asset investors or use digital assets to further criminal offenses such as terrorism, narcotics, and human trafficking. This move is part of a broader set of regulatory changes under President Donald Trump’s administration, which aims to roll back what it views as regulatory overreach by the previous Biden administration.
Key Changes in Enforcement
- Ongoing investigations not aligning with new priorities will be closed.
- The DOJ will not pursue enforcement against crypto exchanges, mixing and tumbling services, or offline wallets for unwitting violations of regulations.
- Prosecutors must prove defendants knew of and willfully broke financial laws before charging them.
Background and Implications
The National Cryptocurrency Enforcement Team was established in 2022 to address the illicit use of cryptocurrencies. It played a crucial role in high-profile cases, including the investigation into Binance and its founder, Changpeng Zhao. The disbandment of this unit and the new approach reflect the Trump administration’s support for easing regulations in the digital assets industry, an area where Trump has personal financial stakes.
The policy change aligns with Trump’s executive order advocating for open access to blockchain networks. The Market Integrity and Major Frauds Unit will cease all cryptocurrency enforcement efforts, while the Computer Crime and Intellectual Property Section will continue to provide guidance and training.
Future of Cryptocurrency Regulation
The Justice Department emphasized it will continue to investigate and prosecute digital asset-related crimes involving investor fraud or support for terrorism and cybercrime. However, it will no longer pursue litigation that effectively superimposes regulatory frameworks on digital assets, deferring this responsibility to financial regulators.
This shift in approach has been made amidst a backdrop of significant fluctuations in the digital asset market, with Bitcoin trading at around $78,000, down from its all-time high near $110,000, and the wider crypto market erasing more than $1.2 trillion from its market cap since December.
