Earlier this week, the U.S. Department of Justice (DOJ) officially disbanded its National Cryptocurrency Enforcement Team (NCET) and announced a major change in its enforcement strategy. Effective immediately, federal prosecutors have been instructed not to target crypto exchanges, self-custody wallets, or privacy tools. It includes services such as mixers and tumblers, especially when it comes to actions taken by end users or unintentional violations of regulations.
New Policy to End “Regulation by Prosecution”
The decision, communicated through a four-page memo titled “Ending Regulation by Prosecution”, was issued by the U.S. Deputy Attorney General Todd Blanche. The memo underscores the DOJ’s departure from its previous enforcement approach.
It also aligns with President Donald Trump’s executive order issued in January, which calls for “regulatory clarity” in the digital asset space.
Blanche stated unequivocally, “The Department of Justice is not a digital assets regulator.” He criticised the prior administration’s tactics, claiming it had “pursued a reckless strategy of regulation by prosecution.” It represents a clear shift in how the U.S. government will interact with the crypto sector moving forward.
Disbanding NCET: A Turn Away from Controversial Cases
The NCET, established in 2021 during President Joe Biden’s administration, brought together experts from the DOJ’s money laundering and cybercrime units. It was instrumental in high-profile cases involving privacy-preserving technologies. It also led investigations into North Korean hackers using crypto to launder stolen funds.
With this new directive, all ongoing investigations that contradict the updated policy must be closed. The Deputy Attorney General’s office will coordinate with the Criminal Division and the Executive Office for U.S. Attorneys (EOUSA) to ensure full compliance with the new policy. All prior directives conflicting with this approach are now rescinded.
Focus Shifts to Investor Protection
The DOJ will now prioritise prosecuting individuals who intentionally harm digital asset investors.
Rather than penalising technology providers or platforms that facilitate crypto transactions, the focus will shift to targeting malicious actors. The new focus is expected to encourage innovation and reassure companies operating in the digital asset ecosystem.
Implications for the Crypto Industry
The end of NCET and the DOJ’s withdrawal from enforcement-based regulation marks a major policy shift. The change is expected to pave the way for a more transparent and innovation-friendly environment in the U.S. crypto market. With clearer boundaries and reduced legal risk for developers and service providers, the digital asset industry may see renewed growth and confidence.
Stay informed,
Rodcas Consulting Group