On April 7, 2025, the Department of Justice (DOJ) released a memo for all department employees titled “Ending Regulation By Prosecution.” The memo articulates enforcement priorities consistent with recent executive orders, provides charging considerations for future cases, explores compensating victims of crimes involving digital assets, refocuses DOJ resources away from crypto and dissolves DOJ’s crypto-enforcement unit, and confirms DOJ’s involvement in the President’s Working Group on Digital Asset Markets.
The memo begins by declaring that DOJ “is not a digital assets regulator” and refocuses the DOJ’s enforcement priorities to align with digital assets positions stated in Executive Order 14178, signed by the President in January. That executive order (EO) directs the administration to protect and promote “access and use for lawful purposes open public blockchain networks without persecution” and “fair and open access to banking services.”
Consistent with the EO, the memo says that DOJ “will stop participating in regulation by prosecution” and, specifically, “will no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations,” absent certain fact scenarios. Instead, DOJ will prioritize investigating and prosecuting “conduct victimizing investors,” specifically, embezzlement and misappropriation of customer funds on exchanges, investment scams, fake development projects, hacking, and exploitation of smart contracts.
The DOJ “will also prioritize cases involving use of digital assets in furtherance of unlawful conduct by cartels, Transnational Criminal Organizations, Foreign Terrorist Organization, and Specially Designated Global Terrorists.” On this point, the memo clarifies that DOJ will target “the illicit financing of these enterprises” but not “the platforms that these enterprises utilize to conduct their illegal activities.”
The memo directs “investigations that are consistent with the foregoing” to be closed, directs the review of ongoing cases for consistency with this policy, and rescinds any inconsistent policies.
The memo offers new charging considerations to be applied “based upon the facts and evidence of each particular case.” It directs prosecutors to focus on “financial harm to digital asset investors and consumers” and use of “digital assets in furtherance of other criminal conducts” like trafficking, terrorism, and organized crime.
Prosecutors are directed not to charge “regulatory violations in cases involving digital assets” like unlicensed money transmitting, violations of the Bank Secrecy Act, and registration violations—“unless there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully.” The memo notes that this “willfulness” consideration is not required by law and “is being imposed as a matter of discretion” in consideration of DOJ’s enforcement priorities.
The memo also directs prosecutors not to charge violations that would require the DOJ to litigate whether a digital asset is a security or commodity, and where there is an adequate alternative criminal charge available like mail or wire fraud. However, the memo notes it is permissible to take the position that “bitcoin or ether is a ‘commodity’ under the Commodity Exchange Act” or “file securities fraud charges where the ‘security’ at issue is the equity or stock in a digital asset company.”
The memo notes that exceptions to the charging policy require approval and may be granted, for example, if there is not “an interest in defending the position that a digital asset is a ‘security’ or commodity’” or if there is no alternative criminal charge under the federal criminal code.
The DOJ memo also states that “as a result of regulations, some digital asset investor victims have only been able to recover the value of their digital assets at the time the fraud was perpetrated”1—whereas “prosecutors have been able to forfeit proceeds of criminal activity . . . that in some instances became worth billions of dollars.” The memo therefore directs the Office of Legal Policy and the Office of Legislative Affairs “to evaluate and propose legislative and regulatory changes to address this concern and improve asset forfeiture efforts in the digital assets space.”
The memo directs the Market Integrity and Major Frauds Unit to “cease cryptocurrency enforcement in order to focus on other priorities, such as immigration and procurement frauds.” It also disbands the National Cryptocurrency Enforcement Team effective immediately, reallocating to the DOJ’s Computer Crime and Intellectual Property Section the responsibility “to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry.”
The memo notes that DOJ will participate in the President’s Working Group on Digital Asset Markets “via attorneys designated by the Justice Department’s senior leadership.” Specifically, the DOJ will identify and make policy recommendations, participate in preparing a report following such recommendations, and implement any recommendations that are adopted.
Industry participants should carefully monitor the DOJ’s new priorities related to digital assets. Although the DOJ was careful to note that charging decisions are still “based on the facts and evidence of each particular case,” the memo describes a fundamental shift away from prosecuting crypto market participants for “the acts of their end users or unwitting violations of regulations.”
The guidance aligns with arguments advanced in some circles that criminal statutes were not meant to apply to those who develop the technology underpinning segments of the crypto industry but instead to those who would use such technology for unlawful purposes. This is also an area that remains in flux.
The DOJ and administration are still generating new policy, and decisions on whether to proceed with prosecutions have yet to be made. Market participants should keep apprised on the latest guidance and applicable law.
For the latest cryptocurrency news and regulatory developments, visit our Fenwick Crypto Review.
Footnotes
1 Specifically, federal regulations provide that “[t]he amount of the pecuniary loss suffered by a victim for which remission may be granted is limited to the fair market value of the property of which the victim was deprived as of the date of the occurrence of the loss.” 28 C.F.R. § 9.8(c).