The U.S. Department of Justice is scaling back its efforts to regulate the cryptocurrency industry and shutting down its National Cryptocurrency Enforcement Team.
Launched in 2022 under the Biden administration, NCET was a key player in prosecuting cryptocurrency-related offenses, including the DOJ’s historic $4.3 billion settlement case against Binance and its CEO Changpeng Zhao.
However, in an Apr. 7 internal memo sent to DOJ staff and seen by crypto.news, deputy attorney general Todd Blanche declared that the team was being disbanded and that ongoing investigations that didn’t meet new criteria would be closed.
The DOJ will now narrow its focus to crypto-related crimes involving terrorism, narcotics trafficking, human trafficking, organized crime, and hacking. The memo explicitly orders prosecutors to stop pursuing cases against crypto exchanges, wallet providers, and mixing services like Tornado Cash based on users’ actions or for regulatory violations made in error.
The DOJ will no longer pursue developers for code that’s misused by others, a win for builders in the industry. Blanche criticized the Biden-era approach to crypto as “regulation by prosecution,” calling it reckless.
A recent executive order from Trump that upholds the freedom to access open blockchain networks without fear of retaliation is cited in the memo. After aggressively courting the crypto community pre-election, Trump now has personal connections to the sector through World Liberty Financial, a business in which his family reportedly owns a 75% revenue stake.
Blanche, a former Trump defense attorney confirmed last month as the DOJ’s second-in-command, also instructed prosecutors not to pursue violations of securities, banking, or commodities laws unless there’s clear evidence of willful misconduct.
Not everyone in the cryptocurrency community is happy about the DOJ’s decision. The DOJ’s move away from proactive enforcement, according to critics, may result in a rise in fraud, scams, and criminal activity. This raises the issue of whether a hand-off approach could encourage malicious actors to operate freely.
