The Department of Justice (DOJ) has effectively disbanded its National Cryptocurrency Enforcement Team (NCET). This unit was established in February 2022 to combat the criminal misuse of cryptocurrencies and digital assets. Deputy Attorney General Todd Blanche made the abrupt decision to shutter the offices in a memo circulated Monday evening. This decision is the biggest step yet in the DOJ’s strategic pivot away from digital asset enforcement and towards more important priorities.
The NCET was established to respond to the growing, complex challenges of criminally exploiting digital currencies and assets. The specialized team, which includes attorneys from all over the Justice Department, are experts in cryptocurrency, cybercrime, money laundering, and forfeiture. They partnered closely with various DOJ components, U.S. Attorneys’ offices, and FBI experts in crypto-crime. Its primary focus was to fight the illegal use of digital assets. In particular, they focused on virtual currency exchanges and businesses that assist in making these illegal transactions possible.
Rationale Behind the Shutdown
Meanwhile, the Trump administration continues to roll back enforcement of white-collar and financial crimes. This is a welcome reduction, including the closure of the NCET. The administration’s shifting priorities will now redirect resources that were previously controlled by the NCET away from processing immigrants to fighting drug traffickers and human smugglers that are part of the immigration. This decision marks a departure from the DOJ’s strategic posture with respect to digital assets.
Crucially, the DOJ Market Integrity and Major Frauds Unit will stop carrying out enforcement actions in the crypto space. This unit, which had started to make significant inroads, will instead now focus on other administration priorities such as immigration and procurement fraud. These changes understate the importance of this realignment of resources within the Justice Department.
New Enforcement Strategy
It’s this latter point that reflects where the Justice Department is heading these days. It will now focus on investigating and prosecuting those who prey on digital asset investors and those who use cryptocurrency to further criminal enterprises. Perhaps most notably, this sharpened approach is more narrowly fixated on combating immediate illicit criminal behaviors than on more widely-considered regulatory compliance enforcement.
"The Department of Justice is not a digital assets regulator," - Blanche
DOJ’s stated desire to shift the focus of enforcement from regulatory imposition through enforcement action to the individual prosecution of wrongdoers. This enforcement-first approach is reflective of the administration’s overall anti-digital asset posture.
"while President Trump's actual regulators do this work outside the punitive criminal justice framework." - Blanche
Implications for the Digital Asset Industry
The decision to dissolve the NCET and change the enforcement priorities is a monumental moment for the digital asset space. In response the DOJ announced it would discontinue litigating or undertaking enforcement actions. This indicates they will stop pushing highly restrictive, regulatory frameworks on digital assets. Such an amendment would result in a more enforcement friendly regime for the industry.
Our initial work will concentrate on addressing clear-cut criminal offenses such as fraud and scam. Rather than continue attempting to regulate the digital asset space through enforcement actions, we’ll adopt a more forward-looking stance. We think this approach will lead to greater predictability for actors in the digital asset space.
