A policy pivot dressed up as a principle
The U.S. Department of Justice’s decision to disband the National Cryptocurrency Enforcement Team (NCET) looks less like routine management and more like a scene change in a global political drama. In an April 7, 2025, memorandum titled “Ending Regulation by Prosecution,” Deputy Attorney General Todd Blanche ordered NCET dissolved “effective immediately,” arguing the DOJ is “not a digital assets regulator” and should stop using criminal cases to impose de facto rules.
That framing may be popular in parts of the market. But it flattens a complicated reality into a slogan: prosecution bad, innovation good, everywhere, instantly today.
What the memo actually changes
The memo narrows crypto prosecutions to two buckets: cases where people “victimize digital asset investors” (scams, misappropriation, rug pulls, hacks), and cases where crypto is used to facilitate other crimes such as terrorism, narcotics trafficking, human trafficking, organized crime, hacking, and cartel or gang financing.
It also says DOJ will no longer target exchanges, mixing/tumbling services, or offline wallets for end-user conduct or “unwitting” regulatory violations, and it directs that investigations inconsistent with the new priorities “should be closed.” The memo shifts resources too: the Fraud Section’s Market Integrity and Major Frauds Unit must cease crypto enforcement, while the Criminal Division’s CCIPS continues guidance, training, and liaison work.
Translated: coordination shrinks, discretion expands, and crypto enforcement becomes more selective.
The global signal: Washington steps back from the plumbing
Because the United States anchors much of the world’s financial enforcement architecture, this is not an internal memo with internal consequences. It signals to allies, adversaries, and compliance teams watching cross-border flows: Washington is stepping back from the “plumbing” cases that often build leverage.
Crypto crimes rarely arrive with a label that says “terrorism” or “fraud” on day one. They emerge from tracing, subpoenas, and the unglamorous pressure that forces intermediaries to keep records, screen activity, and respond quickly. If the U.S. is less willing to press intermediaries except for clearly willful misconduct, the practical effect may be slower disruption of laundering pipelines and faster migration of risky activity toward the least-policed corners of the ecosystem.
Major U.S. reporting on the policy shift has raised concerns that pulling back centralized crypto coordination could hamper complex investigations and intelligence sharing.
“End-user acts” and the accountability gap
The memo’s most consequential promise is not to target platforms for what their users do. In theory, that protects neutral infrastructure. In practice, it can widen an accountability gap: businesses profit from volume while claiming they are merely pipes. The gap widens further when regulators are fragmented, and the criminal system declines to test difficult theories unless intent is easy to prove.
Yes, the DOJ pledges to prioritize victims, an essential goal, but many of the biggest victim cases are discovered through the same compliance failures now framed as second-tier. Treat “boring” violations as beneath prosecutors, and you risk being penny-wise and scandal-foolish.
Bottom line for markets and ministers
Disbanding a unit is easy. Rebuilding deterrence after a permissive signal is not. If this recalibration becomes more performance than protection, the next global crypto blowup will not just be a market failure. It will be a governance failure, made louder by the decision to dim the enforcement lights.
