Trump administration drastically scales back cryptocurrency fraud prosecutions in a major policy shift that aligns with the President’s growing support for the digital asset industry.

At a Glance

• The Justice Department is disbanding its cryptocurrency crime unit, narrowing focus to only specific criminal activities
• Deputy Attorney General Todd Blanche criticized previous cryptocurrency investigations as “ill conceived and poorly executed”
• Trump family has expanded business interests in cryptocurrency, including a venture called World Liberty Financial
• The SEC has simultaneously reduced crypto enforcement, including dropping lawsuits against major platforms like Coinbase
• The policy shift comes after Trump received donations from crypto billionaires and headlined the 2024 Bitcoin Conference

Major Shift in Cryptocurrency Enforcement

The Department of Justice has announced a dramatic overhaul of its cryptocurrency enforcement strategy, effectively disbanding the unit responsible for investigating digital asset crimes. This policy shift represents a significant departure from previous administrations’ approaches to cryptocurrency regulation. Deputy Attorney General Todd Blanche issued a memo directing prosecutors to cease targeting virtual currency exchanges and related services, instead focusing only on specific criminal activities involving digital assets.

According to the directive, DOJ resources will now be dedicated solely to prosecuting cryptocurrency crimes related to fraud, drug trafficking, and terrorism. The memo explicitly instructs prosecutors to close ongoing investigations that don’t align with this narrowed focus. This change effectively ends the broader regulatory approach that had characterized federal cryptocurrency enforcement under previous administrations.

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— John Reed Stark (@JohnReedStark) December 8, 2024

Trump Administration’s Cryptocurrency Connections

The enforcement pullback aligns with President Trump’s evolving stance on cryptocurrency. Once skeptical of digital assets, Trump has become a vocal supporter of the crypto industry during and after his campaign. This transformation coincided with substantial campaign donations from cryptocurrency billionaires and Trump’s appearance as a headliner at the 2024 Bitcoin Conference, where he reinforced his commitment to fostering a favorable regulatory environment for digital assets.

The Trump family has expanded its business interests in the cryptocurrency sector, with a venture called World Liberty Financial among their new endeavors. Additionally, Trump Media & Technology Group has announced plans to introduce digital asset investment products. These business connections have raised questions about potential conflicts of interest as the administration simultaneously scales back enforcement against the industry.

Broader Regulatory Rollback

The Justice Department’s policy shift is part of a broader government-wide reduction in cryptocurrency oversight. The Securities and Exchange Commission has similarly pulled back, dismissing lawsuits and investigations against previously targeted crypto firms like Robinhood and Coinbase. The SEC has also reduced staffing in its crypto enforcement unit and announced it will not regulate memecoins, determining that these novelty digital assets don’t qualify as securities.

The memo from Deputy Attorney General Blanche specifically advises against “litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets.” This language suggests a fundamental shift in the government’s approach to cryptocurrency, moving away from prosecution-based regulation and toward what Blanche described as regulation “outside the punitive criminal justice framework.”

Industry Reaction and Future Implications

The cryptocurrency industry has largely celebrated these changes, viewing them as a fulfillment of campaign promises to create a more hospitable regulatory environment for digital assets. Market analysts note that the regulatory pullback could accelerate adoption and investment in cryptocurrency technologies. However, consumer protection advocates have expressed concern that reduced oversight might leave investors vulnerable to fraud and market manipulation.

The announcement was made late on a Monday, with the policy changes taking immediate effect. The DOJ’s decision to focus only on specific criminal activities rather than broader regulatory compliance represents a fundamental reorientation of federal law enforcement priorities regarding digital assets. With both the DOJ and SEC stepping back from aggressive enforcement, the cryptocurrency industry appears poised for a period of reduced federal scrutiny and potential growth.