The U.S. Department of Justice has issued a sweeping memorandum that fundamentally reshapes how the federal government approaches cryptocurrency enforcement. The directive, signed by Deputy Attorney General Todd Blanche on April 7, 2025, declares that the DOJ “is not a digital assets regulator” and orders an immediate end to what the memo characterizes as “regulation by prosecution” of the crypto industry.
TL;DR
- Deputy AG Todd Blanche issued a memo on April 7 ordering DOJ to stop prosecuting crypto regulatory violations
- The National Cryptocurrency Enforcement Team (NCET) has been disbanded effective immediately
- The Market Integrity and Major Frauds Unit will cease crypto enforcement to focus on immigration and procurement fraud
- DOJ will still pursue cases involving fraud against investors, money laundering, terrorism financing, and cartel activity
- The move aligns with the Trump administration’s pro-crypto stance and defers regulatory oversight to other agencies
The timing of the announcement sends a clear signal. As bitcoin trades near $76,300 and the broader crypto market grapples with a sharp correction that has wiped more than 20% off valuations in Q1 2025, the DOJ is effectively removing one of the industry’s most feared enforcement arms. The memo explicitly instructs prosecutors to close ongoing cases and investigations that are inconsistent with the new priorities.
End of an Enforcement Era
The National Cryptocurrency Enforcement Team, created during the Biden administration, was specifically designed to target exchanges, mixing services, and other platforms “enabling the misuse of cryptocurrency and related technologies to commit or facilitate criminal activity.” Its disbandment marks a dramatic reversal in federal crypto policy.
Equally significant is the directive to the Market Integrity and Major Frauds Unit, which has been ordered to “cease cryptocurrency enforcement in order to focus on other priorities, such as immigration and procurement fraud.” This effectively removes the DOJ’s institutional capacity for pursuing complex crypto-related financial crime cases, leaving a void that other regulatory agencies will need to fill.
What the DOJ Will Still Pursue
The memo does not represent a total withdrawal from crypto enforcement. The department will continue to prosecute cases involving direct harm to investors and consumers, including embezzlement, misappropriation of customer funds on exchanges, investment scams, and fraudulent development projects commonly known as rug pulls.
Additionally, cases involving the use of digital assets by cartels, transnational criminal organizations, and designated global terrorists remain a priority. This includes laundering proceeds of illicit businesses and concealing financing of terrorism from law enforcement. The distinction is crucial: the DOJ is shifting from regulating the technology itself to prosecuting individuals who use it to cause verifiable harm.
Regulatory Vacuum and Industry Response
The memo instructs the DOJ to defer to other agencies for regulatory oversight of digital assets and to generally avoid prosecuting regulatory violations such as unlicensed money transmission or violations of registration requirements. Notably, the department will no longer litigate whether a particular digital asset qualifies as a “security” or “commodity” — a question that has been at the heart of numerous enforcement actions against major crypto platforms.
Industry advocates have largely welcomed the shift, arguing that previous enforcement practices created an environment of regulatory uncertainty that stifled innovation and drove legitimate businesses offshore. Critics, however, warn that the disbandment of specialized enforcement units could leave investors vulnerable to sophisticated fraud schemes that require deep technical expertise to investigate and prosecute.
Why This Matters
The DOJ’s policy reversal represents one of the most significant changes in U.S. crypto enforcement posture in years. By dismantling dedicated enforcement teams and narrowing prosecutorial priorities, the federal government is betting that lighter-touch enforcement will foster innovation while other agencies — primarily the SEC and CFTC — handle regulatory compliance. The risk is that bad actors will exploit the enforcement gap before the regulatory framework fully adapts. For investors and builders in the crypto space, the new landscape offers greater freedom to experiment but demands heightened personal due diligence.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Readers should consult qualified professionals for guidance on regulatory compliance and investment decisions.
the NCET prosecuted tornado cash devs for writing open source code. disbanding it is the bare minimum. now return the funds and expunge the records
Finally, some common sense from the DOJ. The ‘enforcement first’ approach was just strangling innovation while other countries raced ahead. If they actually follow through with clear guidelines, we might see some real institutional money feeling safe enough to dive in.
NCET disbanded and the Major Frauds Unit ordered to cease crypto enforcement. this is the biggest regulatory pivot in crypto history
NCET disbanded and major frauds unit ordered to cease crypto cases. the enforcement apparatus that chased mixers and dex devs is gone overnight
Yara NCET disbanded overnight. the same unit that chased Tornado Cash devs is gone. historic pivot
chasing tornado cash devs was peak overreach. glad NCET is gone but need to watch what replaces it
Big if true, but I’m staying skeptical for now. We’ve seen ‘policy shifts’ before that ended up being just a change in terminology while the same aggressive tactics continued. Let’s see if they actually drop some of these ongoing cases before we start celebrating.
DeFi_Dan exactly. the memo says they wont prosecute regulatory violations but fraud and money laundering cases will continue under different units. same people different letterhead
DeFi_Dan staying skeptical is smart. lets see if they actually drop ongoing cases. memos are easy, follow through is what matters
theyll still pursue actual fraud and money laundering. the memo just stops treating regulatory uncertainty as a crime
theyll still go after actual fraud and laundering. the memo just stops treating a token listing as a securities violation. huge difference
exactly this. memos are cheap. show me dropped charges and returned assets then ill celebrate
grid_skeptic_ dropping charges is the only metric that matters. the memo is a press release until existing cases get dismissed
todd blanche understands the space from his private sector work. having someone who knows the difference between a dex and a cefi lending platform matters