DOJ Disbands Crypto Unit as Trump’s Deregulation Efforts Persist

Key Points to Know:

• The U.S. Department of Justice has disbanded its National Cryptocurrency Enforcement Team (NCET), effective immediately, shifting its focus away from crypto regulation enforcement.

• The DOJ will no longer prosecute crypto exchanges and services for regulatory violations, instead concentrating on criminal activities involving digital assets.

• This decision follows President Trump’s executive order aimed at providing clearer regulatory guidelines for the crypto industry.

On Monday, the U.S. Department of Justice (DOJ) disbanded its crypto unit, informing staff that the DOJ would be "narrowing" its crypto enforcement activities in line with President Donald Trump's January executive order on digital assets, which promised to provide "regulatory clarity and certainty" for the crypto industry.

In a four-page memo to staff titled "Ending Regulation by Prosecution," U.S. Deputy Attorney General Todd Blanche announced the immediate disbanding of the National Cryptocurrency Enforcement Team (NCET), which was established in 2022 under then-President Joe Biden.

Blanche stated, “The Department of Justice is not a digital assets regulator.” He criticized the previous administration for using the DOJ to pursue a "reckless strategy of regulation by prosecution," which he described as poorly planned and executed. Going forward, the DOJ will refrain from pursuing litigation or enforcement actions that effectively impose regulatory frameworks on digital assets, as President Trump’s designated regulators handle this work outside the criminal justice system.

Blanche informed DOJ staff that the department would no longer pursue cases against crypto exchanges, mixing services, or offline wallets "for the actions of their end users or unwitting violations of regulations." Staff were instructed not to charge regulatory violations in crypto-related cases, including those related to the Bank Secrecy Act (BSA), unlicensed money transmitting, and other infractions tied to federal securities and commodities laws.

Instead, the DOJ will focus on prosecuting individuals who exploit digital asset investors or use crypto for criminal activities such as terrorism or gang financing.

Blanche emphasized that any ongoing investigations not in line with this new policy should be closed. He also stated that his office would collaborate with the DOJ’s criminal division to review active cases for consistency with the new approach.

The disbanding of the NCET follows similar actions by other federal agencies under Trump’s administration. The U.S. Commodity Futures Trading Commission (CFTC) reduced its specialized enforcement teams, including its crypto-focused team, down to just two, as part of Acting Chair Caroline Pham’s push to increase efficiency and stop "regulation by enforcement."

The NCET had been involved in several high-profile crypto cases, including actions against the crypto mixer Tornado Cash and its developers, as well as the Mango Markets exploiter, Avi Eisenberg, who faces sentencing later this week after being convicted of fraud and market manipulation.

The memo was issued a week and a half after President Trump pardoned the crypto trading platform BitMEX, along with its founders and senior executives, following their previous guilty pleas to Bank Secrecy Act charges.