In a significant shift in its law enforcement strategy, the Justice Department has decided to disband a specialized team of prosecutors focused on cryptocurrency crimes. This decision marks a noticeable pivot away from complex cases involving banking and securities laws, as outlined in a memo reviewed by The Associated Press. The memo, issued by Deputy Attorney General Todd Blanche, clearly states, “The Department of Justice is not a digital assets regulator.”

This reallocation of resources is the latest development under the Trump administration, which appears to be taking steps to support the cryptocurrency industry. In stark contrast to the Biden administration's more aggressive stance on regulating the industry, the Trump administration's actions are widely viewed as an effort to promote growth in the cryptocurrency market. The memo aligns with previous shifts in enforcement priorities at the Securities and Exchange Commission (SEC), echoing a larger trend towards deregulation in this financial sector.

Blanche criticized the prior approach taken by the Biden administration, suggesting it relied on what he termed a “reckless strategy of regulation by prosecution.” He characterized this strategy as poorly conceived and executed. Moving forward, Blanche indicated that the Justice Department’s focus would be on addressing direct criminal activities associated with cryptocurrency, such as fraud perpetrated against investors or the use of digital assets in serious crimes including human trafficking, drug trafficking, and terrorism.

The cryptocurrency industry, which invested significantly in supporting Trump's election campaign, has long voiced concerns regarding what they perceive as unfair targeting by the Biden administration. Critics within the industry argue that many innocent participants have faced undue scrutiny and enforcement actions, both criminal and civil. A prominent case illustrating this sentiment is the ongoing legal battle against the developers of Tornado Cash, a cryptocurrency mixer designed to obfuscate asset ownership, which has become a rallying point for privacy advocates and crypto enthusiasts.

Peter Van Valkenburgh, executive director of the advocacy group Coin Center, expressed his support for Blanche’s memo on social media platform X, stating, “We should be going after bad guys. Not the developers of good tools that bad guys happen to use.” His comments highlight a growing frustration within the industry regarding the legal vulnerabilities faced by developers and legitimate cryptocurrency services.

Originally established during President Biden’s tenure, the National Cryptocurrency Enforcement Team was tasked with targeting entities such as exchanges and mixers that were facilitating criminal activities through the misuse of cryptocurrency technologies. However, Blanche's memo indicates that such entities will no longer be held accountable for actions taken by their users or for accidental regulatory violations.

The immediate disbandment of this enforcement team signals a broader shift in priorities within the Justice Department. Blanche further announced that the Market Integrity and Major Frauds Unit, which previously engaged in cryptocurrency enforcement, will redirect its focus toward other pressing issues, including immigration and procurement fraud.

Interestingly, former President Trump, who once held skeptical views about cryptocurrency, has publicly committed to making the United States a global leader in the crypto space. Together with his family, he has sought to diversify their financial interests by engaging in various crypto-related ventures, demonstrating a substantial change in his perspective on digital currencies.