On April 7, 2025, U.S. Deputy Attorney General Todd Blanche issued a memorandum titled “Ending Regulation by Prosecution” (Blanche Memo), outlining a new Department of Justice approach to digital asset enforcement. The Blanche Memo discusses the DOJ’s intent to focus its prosecutorial efforts away from crypto intermediaries and instead targeting “individuals who victimize digital asset investors, or those who use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.” Further, the Blanche Memo emphasizes that “[t]he digital assets industry is critical to the Nation’s economic development and innovation,” and the memorandum is being issued pursuant to President Trump’s directive to “end the regulatory weaponization against digital assets.”

Background

A brief review of the DOJ’s recent crypto strategy provides background and context to the Blanche Memo. Under the Biden administration, the federal government expanded its prosecutorial activity in the digital asset space. As part of that activity, the DOJ established the National Cryptocurrency Enforcement Team (NCET) and the White House announced what it called the “First-Ever Comprehensive Framework For Responsible Development of Digital Assets.” The Biden DOJ brought multiple prosecutions targeting intermediaries, such as crypto exchanges. As an example, the DOJ charged HDR Global Trading Limited, also known as “BitMEX,” with Bank Secrecy Act violations after BitMEX allegedly: (i) provided cryptocurrency trading services to U.S. customers after claiming it had withdrawn from the U.S. market to avoid being subject to U.S. regulations; and (ii) failed to implement and maintain adequate anti-money laundering and KYC programs.¹ Similarly, in 2023, the Justice Department charged the founders of Tornado Cash, a well-known cryptocurrency mixer, with money laundering and related offenses. The SEC and CFTC have also pursued several enforcement actions against exchanges and token issuers in recent years²

The Blanche Memo

The Blanche Memo declares that the DOJ “is not a digital assets regulator” and is ending “regulation by prosecution in this space.” As outlined in the Blanche Memo, the Justice Department plans to focus on digital asset investigations and prosecutions targeting “conduct victimizing investors, including embezzlement and misappropriation of customers’ funds on exchanges, digital asset investment scams, fake digital asset development projects such as rug pulls, hacking of exchanges and decentralized autonomous organizations resulting in the theft of funds, and exploiting vulnerabilities in smart contracts.” The Blanche Memo emphasizes that enhanced focus will be placed—in accordance with the “total elimination” policy described in Executive Order 14157—on cases involving cartels, transnational criminal organizations, foreign terrorist organizations, and specially designated global terrorists, which have “increasingly turned to digital assets to fund their operations and launder the proceeds of their illicit businesses.” Specifically, the Blanche Memo notes that “[a]s part of the Justice Department’s ongoing work against fentanyl trafficking, terrorism, cartels, and human trafficking and smuggling, the [DOJ] will pursue the illicit financing of these enterprises by the individuals and enterprises themselves, including when it involves digital assets, but will not pursue actions against the platforms that these enterprises utilize to conduct their illegal activities.” Indeed, the Blanche Memo notes that virtual currency exchanges, mixing and tumbling services, and offline wallet providers will not be targeted based on bad acts committed by “end users” or for “unwitting violations of regulations.”

In accordance with the above priorities, the Blanche Memo concludes by stating that “[o]ngoing investigations that are inconsistent with the foregoing should be closed.” And pursuant to the DOJ’s shift in focus, the Blanche Memo announces that “[c]onsistent with the narrowing of the enforcement policy relating to digital assets,” NCET is to be disbanded, effective immediately. Similarly, the Blanche Memo reveals that going forward, the DOJ Fraud Section’s “Market Integrity and Major Frauds Unit shall cease cryptocurrency enforcement in order to focus on other priorities, such as immigration and procurement frauds.” The Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) “will continue to provide guidance and training to Department personnel and serve as liaisons to the digital asset industry.”

With these significant policy announcements in mind, the Blanche Memo directs federal prosecutors to consider several factors when deciding whether to pursue criminal charges involving digital assets. According to the Blanche Memo, prosecutors:
 

The Blanche Memo also discusses an issue with compensating victims in the digital asset sector. Specifically, it addresses a concern where victim losses due to fraud and theft—including in several high-profile instances where companies had gone bankrupt while maintaining custody of victim assets—have been calculated based on the asset’s value at the time the fraud occurred. This approach, the Blanche Memo says, prevents victims from benefiting from corresponding gains that occurred during or after the fraud (when the victim would have possessed the asset). Accordingly, the Blanche Memo instructs the Office of Legal Policy and the Office of Legislative Affairs to evaluate and propose legislative and regulatory reforms to address this concern and improve asset forfeiture efforts in cases involving digital assets.

The Blanche Memo concludes by affirming the DOJ’s commitment to “fully participate” in President Trump’s Working Group on Digital Asset Markets, established under Executive Order 14178. Specifically, DOJ attorneys will “identify and make recommendations regarding regulations, guidance documents, orders, or other items that affect the digital asset sector” and assist in preparing a report to President Trump, outlining regulatory and legislative proposals designed to advance the policies and priorities set forth in the aforementioned Executive Order.

Implications

As noted in the Blanche Memo, the DOJ has expressed an intent to “narrow” its prosecutorial focus as it relates to digital assets, a step that appears consistent with other recent efforts to bolster innovation and development in the cryptocurrency industry. Pursuant to this change in focus, the Blanche Memo notes that the DOJ “will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump’s actual regulators do this work outside the punitive criminal justice framework.” Indeed, the DOJ’s message in the Blanche Memo appears to mirror recent trends from the SEC and CFTC. Members of the digital asset community should take notice as the regulatory framework for cryptocurrencies continues to evolve.