The Trump administration is making significant changes to its approach to cryptocurrency regulations, signaling a shift in priorities that could reshape the landscape for virtual currencies in the United States. In a recent memo, U.S. Deputy Attorney General Todd Blanche announced the disbanding of the National Cryptocurrency Enforcement Team (NCET) and instructed federal prosecutors to ease enforcement against crypto exchanges and related services.
According to Blanche's memo, the Justice Department will no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for the actions of their end users or unwitting violations of regulations. "The Department of Justice is not a digital assets regulator," he stated, emphasizing a new focus for the administration.
This shift aligns with President Donald Trump's pro-crypto policies, which include directives to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to relax regulations on cryptocurrencies. The administration's new stance is also reflected in its creation of a digital assets reserve.
Blanche criticized the previous administration's approach, particularly under President Joe Biden, describing it as a "reckless strategy of regulation by prosecution." He asserted that the Trump administration will concentrate on prosecuting individuals who exploit digital asset investors or use cryptocurrencies for serious criminal activities such as terrorism, drug trafficking, and organized crime.
As part of this new direction, the Justice Department may no longer pursue high-profile cases like Tornado Cash, which allegedly laundered over $1 billion, or the conviction of hacker Avraham Eisenberg for a $110 million market manipulation scheme. Blanche also took issue with how the prosecution of Sam Bankman-Fried was handled, suggesting that some investor victims might have been made whole, an argument Bankman-Fried himself has made.
Meanwhile, U.S. crypto policy is taking shape as Congress considers major reforms. This week, the Committee on Financial Services is holding meetings to clarify domestic crypto regulations and securities laws. On April 9, 2025, the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence will convene a hearing titled "American Innovation and the Future of Digital Assets: Aligning U.S. Securities Laws for the Digital Age." This hearing is expected to spotlight the Financial Innovation and Technology for the 21st Century Act, known as FIT21.
FIT21 has already passed the House with bipartisan support in May 2024 and could reach President Trump's desk by the second quarter of 2025. The bill aims to clarify the regulatory environment surrounding cryptocurrencies by formally dividing jurisdiction between the CFTC and the SEC. Under this proposal, the CFTC would oversee digital commodities like Bitcoin, while the SEC would regulate what are termed "restricted digital assets," which include securities-like tokens.
Supporters of FIT21 argue that this framework would finally provide legal certainty for crypto innovators, investors, and regulators alike. In addition to FIT21, regulators are also set to consider two competing stablecoin bills: the GENIUS Act and the STABLE Act. Both proposals aim to establish clearer rules and stronger consumer protections for stablecoins, but they differ in how they propose to distribute regulatory power between federal and state authorities.
The STABLE Act advocates for a centralized framework with greater oversight from the Federal Reserve, while the GENIUS Act supports a hybrid model where the Fed would oversee larger issuers with more than $10 billion in circulation, leaving smaller entities under state discretion. Lawmakers are expected to discuss these details during the upcoming hearing, which could pave the way for a unified regulatory framework.
Despite the Trump administration's pro-crypto ambitions, questions surrounding the president and his family's ties to the crypto industry continue to arise. Notably, President Trump holds a crypto portfolio valued at just over $1.15 million, primarily composed of memecoins and stablecoins, much of which was funded by campaign donations. Ahead of his January 2025 inauguration, Trump offloaded tens of millions in crypto while the market was still in an upswing.
Additionally, the Trump family has been linked to World Liberty Financial (WLFI), a decentralized finance (DeFi) project that raised $550 million through its WLFI token sale and is preparing to launch its own stablecoin, USD1. Concerns have been raised regarding the potential for the Trump family to receive up to 75% of WLFI revenues through a Trump-linked media and tech firm, DT Marks DEFI LLC.
As the landscape of cryptocurrency regulation continues to evolve, the implications of these developments remain to be seen. The Trump administration's relaxed approach to enforcement, coupled with ongoing legislative efforts, could significantly alter the future of digital assets in the United States, fostering an environment that some believe will encourage innovation while others fear may lead to increased risks for investors.
