The US Department of Justice (DoJ) has taken a notable policy change pertaining to the enforcement of cryptocurrency law by getting rid of its National Cryptocurrency Enforcement Team (NCET), a unit specifically constructed to address sophisticated crypto crimes. This decision, explained in a memo to the department’s employees, reflects a broader shift away from intensive prosecution towards a more favorable attitude towards the industry.
A Backward Shift: The NCET Is No More
The NCET, set up three-and-a-half years ago, was charged with the oversight of the criminal exploitation of cryptocurrencies, particularly the crime associated with virtual currency exchanges, mixing services, and money laundering. However, an updated memorandum titled “Ending Regulation By Prosecution” states that the NCET is set to be disbanded immediately.
A Trump-Centered Change of Policy: Putting Innovation Forward
This action stems from the executive order that President Trump had issued, which, under the category of “Strengthening American Leadership in Digital Financial Technology,” not only revokes a previously issued order from the Biden administration but also calls for unapologetic enforcement policies meant to aid in the creation of a “vibrant and inclusive digital economy.”
Blanch’s memo further reminds us that the DOJ’s purpose and jurisdiction are not framed within “digital asset regulators,” enforcing the cut-geared approach “prosecute and regulate” approach under the previous administration as wildly irresponsible. We are now seeing the departure of regulating in the shadows of Injustice.
A Restructured Approach to Enforcement:
The dismantling of the NCET is but one facet in the overarching reconfiguration of the DoJ’s strategy toward enforcing laws against digital assets. No longer will the Chapter 6 prosecutors have to pretend to be forensics experts under the reasoning that the society has moved to digital anything. The memo examines the new approach whereby prosecutors from US Attorneys’ Offices will apply “old-fashioned” tools of criminal justice to prosecute digital assets. The Market Integrity and Major Frauds Unit will no longer engage in the enforcement of cryptocurrency to give attention to other activities such as immigration fraud and procurement fraud.
Even as the NCET is being disbanded, the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) will still continue to assist and offer instruction to DoJ employees as well as act as industry liaisons within the digital asset industry.
A Political Context: Adjusting Importance
This portion of the memo gives an explanation of the political reasoning for this decision. It includes instructions by Trump that called for an end to what he called the “weaponization of regulation against the digital assets” industry while focusing resources on the prosecution of perpetrators that prey upon investors in digital assets or utilize digital assets to advance terrorism, narcotics distribution, organized crime, or other forms of criminal enterprise.
NCET’s Legacy: A Brief Attempt
The NCET was established in 2021, and Eun Young Choi was appointed as the office’s first director. But, in July of 2023, the NCET was, in quotes, “merged into” CCIPS, which the description that followed termed “forming a single office that brings together all the work the Criminal Division does on cybercrime.” Regardless of the merger, this distinctive function of the NCET is now being closed.
A Greater Digital Asset Framework: New Units and Task Forces
The dismantling of NCET is part of a larger change in direction in the U.S. government’s policy concerning digital assets. The SEC has issued a recent contravention announcing the formation of a new ‘Cyber and Emerging Technologies Unit,’ which will replace the SEC Crypto Assets and Cyber Unit. Also, President Trump has formed a new presidential working group on digital asset markets, which is now chaired by David Sacks.
A New Era for Crypto Enforcement
The DoJ’s move to eliminate the NCET is a clear indication of change in the posture of the US government towards cryptocurrency enforcement. The balance shifts towards innovation and the growth of the industry rather than heavy-handed prosecution, indicating a new chapter for regulation of digital assets. It is still unclear how this change will impact the ongoing battle against crypto crime.
