The United States Justice Department is disbanding its National Cryptocurrency Enforcement Team (NCET), and ordering prosecutors to focus investigations related to drug cartels and terrorist groups, according to a Tuesday announcement.
A Monday night memo from Deputy Attorney General Todd Blanche accused former president Joe Biden’s administration of a “reckless strategy of regulation by prosecution” of the nascent digital asset sector.
Originally launched in February 2022, the NCET unit was part of the administration’s effort to combat fraud and illicit finance. Its biggest success involved Binance and its founder, Changpeng Zhao. Zhao pleaded guilty to violating laws aimed at preventing money laundering.
Under President Donald Trump, whose family is building its own crypto enterprise, the U.S. government reversed course on crypto. Trump promised to make the United States the “crypto capital of the planet.”
Moving forward, Blanche stated the department will prioritize investigations into individuals who victimize digital asset investors or use digital assets for criminal offenses, such as terrorism, narcotics trafficking, human trafficking, organized crime, hacking, and cartel and gang financing.
Blanche wrote that any ongoing investigations “inconsistent” with this new policy “should be closed.” Blanche cited one of Trump’s executive orders as the basis for his directive. The order calls for government to help ensure individuals and private sector companies can access “open blockchain networks without persecution.”
Trump, who courted the sector during the 2024 campaign, has called for easing crypto regulations. Since he took office, regulators have rolled back the government’s efforts to control the industry.
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Justice Department to stop targeting exchanges, wallets and mixers
The Securities and Exchange Commission refocused its crypto enforcement team. It paused or abandoned high-profile cases many thought the agency was winning. Last month, a U.S. banking regulator told banks they could engage in some crypto activities.
The Deputy Attorney General’s Monday memo said the Justice Department would stop targeting virtual currency exchanges, offline wallets, and services like mixers and tumblers. Furthermore, these services make crypto transactions anonymous and are no longer liable for “acts of their end users or unwitting violations of regulations.”
Blanche, a former criminal defense attorney for President Trump, was confirmed as the number two official at the Justice Department.
In his memo, he ordered prosecutors not to charge regulatory violations under federal banking, securities, and commodities laws unless evidence shows wilful violations of licensing or registration requirements.
Trump and his family now have a stake in the crypto sector. Furthermore, the Trump family claims 75 per cent of net revenues from token sales by World Liberty Financial.
Ahead of his inauguration, Trump launched a crypto token. The companies behind the “meme coins” $TRUMP and $MELANIA, for Melania Trump, stated they are not investments or securities. They described the tokens as an “expression of support.”
In addition to easing regulations, Trump has pledged to support the development of decentralized finance (DeFi) and blockchain technologies. He has emphasized the importance of protecting digital asset investors while reducing bureaucratic hurdles for crypto startups.
Trump’s administration also focused on ensuring that digital currencies can operate without unnecessary interference, aligning with his broader vision of fostering innovation and strengthening the U.S.’s position in the global crypto market.
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