DOJ Disbands National Cryptocurrency Enforcement Team and Alters Crypto Prosecution Approach

The U.S. Department of Justice has disbanded its National Cryptocurrency Enforcement Team and announced it will cease "regulation by prosecution." This decision was communicated in a memo from Deputy Attorney General Todd Blanche, indicating that the DOJ will not impose regulatory frameworks on digital assets without input from relevant agencies.

Key Points

The DOJ will focus on prosecuting fraud and criminal activities but intends to avoid cases requiring determination if a digital asset is a security or commodity.
Concerns have emerged that this shift may allow some criminal activities in the crypto sector to go unpunished.
Several Democratic senators criticized the decision, expressing fears it could facilitate money laundering and other criminal activities.
New York Attorney General Letitia James called for legislative measures to address risks associated with cryptocurrency.
The memo emphasizes that prosecutors should charge violations only if there is evidence of willful misconduct regarding licensing requirements.
Many attorneys interpret the memo as allowing continued prosecution of serious crimes while reducing regulatory involvement by the DOJ.
The memo does not preclude all enforcement actions but aims to clarify the DOJ's prosecutorial discretion in crypto cases.

This development indicates a broader shift in the federal approach to regulating and enforcing laws related to cryptocurrencies.