The entire terrain of cryptocurrency regulation in the United States has changed after the Department of Justice (DOJ) crypto unit was shut down and no longer will investigate crypto-related issues. As stated in a memo obtained by Fortune, this development marks a change in the governance of digital assets during the Trump administration.
Blame the Previous Admin for Strategy
“We are not digital asset regulators,” said Deputy Attorney General Todd Blanch. “The NCET is disbanded effective immediately.” The DOJ shifted its stance on the unit’s previously aggressive compliance-focused legal framework. Blanch went on to explain that, “The Department of Justice is not a digital assets regulator. However, the prior administration used the Justice Department to pursue a reckless strategy of regulation by prosecution.” Clearly marked a shift away from “regulation by prosecution.”
Change Driver: Trump Federal Executive Order
Blanch’s remarks align with the January federal executive order issued by President Trump, which sought to “create policy objectives of the cryptocurrency industry,” thus easing restrictions and enabling other agencies to shift into a more proactive mode and enabling flexible policies. This also led to the decision of the dissolution of the NCET.
NCET’s Legacy: High-Profile Cases
Under the Biden administration, the NCET was created in 2021, and it was responsible for some of the most public crypto cases, including the investigation into Tornado Cash—a crypto mixer that obscured fund ownership—as well as the prosecution of Avraham Eisenberg, a hacker who siphoned enormous wealth from a crypto trading protocol. The unit also oversaw several other cases involving North Korean actors who were laundering the proceeds from crypto hacks.
A New Directive: Focus on Investor Protection
Following the dissolving of the NCET, DOJ staff has been re-tasked to focus on “prosecuting those who defraud digital asset investors.” There are no memos urging action against crypto exchanges, mixers like Tornado Cash, or ‘offline wallets’ that would constitute criminal activity. The emphasis of this shift seems to lean towards individual investors and away from imposing regulations on the industry.
Broader Deregulation: A Pro-Crypto Position
This is part of a bigger picture of deregulation of the crypto assets under the Trump administration, which also ordered other agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to reduce their oversight of the crypto industry.
Trump’s Vision for a ‘Bitcoin Superpower’ and U.S. Crypto Dominance
The Trump-era presidency appears to be on a hook with crypto, as he proclaimed that the U.S. should aim to become the “Bitcoin superpower of the world and the crypto capital of the planet” as part of crypto’s mainstream adoption. During this term, the U.S. also witnessed a rise in executive orders, such as the one on creating a strategic Bitcoin and digital asset reserve and forming a Bitcoin Strategic Command, which included meetings with crypto industry leaders.
What’s Next for US Crypto Policy?
The proliferation of crypto units in the DOJ marks a turning point in the policy for digital assets in the United States, especially with regard to maintaining authoritative control. While many view less intervention as the goal, others see it as laissez-faire to oversight guidance, which raises questions about how much oversight exists for the impending crypto spring. A more hands-off attitude invites speculation about the adequacy of investor safeguards and overall market equilibrium. With the pro-crypto agenda of the Trump administration, there is clear contemplation that change is on the horizon for the industry.
