Report: Justice Department to End ‘Regulation by Prosecution’ of Crypto-Related Activities
The U.S. Justice Department will reportedly limit its cryptocurrency enforcement efforts to the use of digital assets in crimes related to things like terrorism, drug cartels and fraud.
Deputy Attorney General Todd Blanche said in a Monday (April 7) memo that this change is meant to leave crypto-related activities to regulators, marking a change from the Biden administration’s use of the Justice Department to pursue “regulation by prosecution,” Bloomberg reported Tuesday (April 8), citing the memo it had seen.
The Justice Department did not immediately reply to PYMNTS’ request for comment.
According to the Bloomberg report, the memo also said that the Justice Department has disbanded its National Cryptocurrency Enforcement Team, plans to close existing investigations that don’t align with its new priorities, and will no longer target crypto-related organizations for “acts of their end users or unwitting violations of regulations.”
Reuters reported on the memo Tuesday, saying that Blanche said the basis for the memo is an executive order from President Donald Trump that said the government must ensure users can access “open blockchain networks without persecution.”
In that Jan. 23 executive order, Trump said his administration supports the responsible use of digital assets, blockchain technology and related technologies.
“The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our Nation’s international leadership,” the order said.
Among other things, the order directs departments and agencies to identify regulations and other actions affecting the digital asset sector that should be rescinded or modified.
On March 21, Securities and Exchange Commission (SEC) Acting Chairman Mark T. Uyeda said the SEC has changed how it regulates digital assets.
“This approach of using notice-and-comment rulemaking or explaining the Commission’s thought process through releases — rather than through enforcement actions — should have been considered for classifying crypto assets under the federal securities laws,” Uyeda said during a roundtable focused on the regulation of digital assets.
On March 28, the Federal Deposit Insurance Corp. (FDIC) provided new guidance saying that FDIC-supervised institutions can engage in crypto-related activities without receiving prior FDIC approval, provided they adequately manage the associated risks.
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