On April 8, 2023, the U.S. Justice Department announced a significant shift in its approach to digital currency regulation by disbanding its National Cryptocurrency Enforcement Team. This decision, outlined in a memo by Deputy Attorney General Todd Blanche, instructs prosecutors to redirect their focus towards investigating criminal activities associated with cartels and terrorist groups that utilize digital currencies for illicit purposes.
The memo, which was shared with employees late on Monday night, criticized the previous administration under former President Joe Biden for adopting a reckless strategy that emphasized regulation through prosecution within the digital asset sector. Moving forward, Blanche stated that the Justice Department will concentrate on investigations targeting individuals who exploit digital asset investors and those who use these assets to facilitate criminal activities, including terrorism, narcotics trafficking, human trafficking, organized crime, hacking, and financing for cartels and gangs.
In light of this policy shift, Blanche indicated that any ongoing investigations that do not align with this new directive should be terminated. This move marks a clear departure from the previous enforcement tactics aimed at regulating the burgeoning digital asset industry.
The change in policy comes amidst President Donald Trump’s vocal support for less stringent regulations in the digital asset industry. Notably, Trump has financial interests in this sector, with reports indicating that the Trump family holds a claim on 75% of the net revenues from token sales by World Liberty Financial, a cryptocurrency venture. Additionally, Trump launched a crypto token prior to his inauguration, further intertwining his political and financial interests in digital currencies.
Blanche’s memo also specified that the Justice Department will cease targeting virtual currency exchanges, mixing and tumbling services, as well as offline wallets for actions committed by their users or unintentional regulatory breaches. Prosecutors are now directed not to pursue charges for regulatory violations under federal banking, securities, and commodities laws unless there is clear evidence that a company or individual has willfully disregarded licensing or registration requirements.
As the Justice Department pivots its strategy regarding cryptocurrency enforcement, the focus on combating serious criminal activities rather than regulating the digital asset landscape signifies a major shift in the U.S. government's approach to this rapidly evolving sector. With Deputy Attorney General Todd Blanche at the helm, the new directive aims to enhance the safety of digital asset investors while addressing the misuse of cryptocurrencies in criminal enterprises.
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