The U.S. Justice Department has made it official and abolished the National Cryptocurrency Enforcement Team (NCET). This initiative was launched in 2022 in order to combat the illicit use of cryptocurrencies. This decision marks a significant change in how the federal government decides to regulate and enforce digital assets. The department is delegating the enforcement of these priorities to U.S. attorney’s offices in all 93 districts around the country.
Initially established by then-President Joe Biden, the NCET was charged with combating the use of cryptocurrencies in a range of criminal enterprises. The closure comes amid a broader re-evaluation of the federal government’s approach to digital currencies. This change follows a number of recent high-profile cases and continued focus on the cryptocurrency industry.
Beginning immediately, the digital asset cases will be centralized under the auspices of individual U.S. attorney’s offices. Their scope will be limited mainly to nontraditional crimes such as terrorism. This change is an encouraging step toward a more community-based prosecutorial ethos. More importantly, it has the potential to significantly increase the effectiveness of enforcement efforts across jurisdiction. The Computer Crime and Intellectual Property Section (CCIPS) is dedicated to assisting Justice Department employees. They complete the picture, providing practical and educational training to all involved in the capitol of these investigations. CCIPS will undoubtedly be an important connective tissue with the digital asset industry. This makes sure federal prosecutors are more in touch with recent developments and best practices.
An internal memo lays out the new agenda for the department. It will instead target the prosecution of those who use digital assets to commit or promote more serious crimes. This is a big change from previous efforts by the Justice Department to go after every possible digital asset case. Instead, it will be a serious threat such as investor fraud, terrorism, human trafficking, cartel operations and cyber crime.
The NCET became the tip of the spear in many high profile investigations. They honed in on the splashiest cases, most notably against Binance—the largest cryptocurrency exchange in the world. In 2023, Binance’s founder, Changpeng Zhao, pleaded guilty to violating U.S. anti-money laundering laws, leading to a substantial $4.3 billion settlement. A handful of similar local cases served to highlight the difficulties of regulating a quickly innovating industry. It exposed the dangers created by opaque legal frameworks.
Aside from the decision to disband the NCET, that’s a pretty big deal. Especially since the Trump administration, there’s been a fast attack on regulatory oversight of the burgeoning cryptocurrency sector. Alongside this shift, the Securities and Exchange Commission (SEC) has paused or abandoned several high-profile enforcement actions, indicating a potentially less aggressive stance towards regulating digital assets.
In addition, recent deregulation in the banking sector has made it easier to adopt crypto. A rule that previously blocked Wall Street banks from engaging with crypto has been revoked, allowing traditional financial institutions greater freedom to enter the digital asset space. As the landscape continues to change, companies like World Liberty Financial are leading the charge. This yet-to-be-launched decentralized digital bank has already sold $550 million in tokens!
The Justice Department is currently hard at work shaping its new approach to handling these digital assets. Simultaneously, it continues to be committed to addressing the most egregious crimes associated with cryptocurrencies. The focus on prosecuting high-stakes offenses suggests that while oversight may have diminished at certain levels, law enforcement remains vigilant against misuse of these technologies.
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