Donald Trump’s presidential campaign has received substantial financial support from various cryptocurrency firms and affluent industry investors. In exchange for this backing, Trump has expressed his ambition to position the United States as the “crypto capital of the world.” He has taken significant steps in this direction, including issuing an executive order aimed at “strengthening American leadership in digital financial technology,” and has announced plans for a national bitcoin reserve along with a stockpile of digital assets. As part of this effort, Trump and his family have also made personal investments in the cryptocurrency sector, with both he and his wife, Melania, launching their own meme coins. Additionally, the Trump family has established a cryptocurrency exchange named World Liberty Financial, while Trump’s sons, Eric and Don Jr., have recently set up a Bitcoin mining operation.
### Justice Department’s Shift on Crypto Investigations
In a notable development, the Justice Department under Trump has signaled a halt to investigations concerning crypto fraud. This information comes from a recent memo issued by U.S. Deputy Attorney General Todd Blanche, who previously represented Trump in a trial that resulted in 34 felony convictions related to business record falsifications. In the memo, Blanche stated that the Justice Department would refrain from engaging in litigation or enforcement actions that impose regulatory frameworks on digital assets, clarifying that the DOJ is not equipped to act as a digital asset regulator. Instead, the focus will shift to prosecuting individuals who exploit digital asset investors or use cryptocurrencies for serious criminal activities, such as terrorism, drug trafficking, and organized crime.
### Market Integrity Unit and National Cryptocurrency Enforcement Team Disbanded
The memo further details that the department’s Market Integrity and Major Frauds Unit will discontinue cryptocurrency enforcement to prioritize other pressing matters, including immigration and procurement fraud. Furthermore, the National Cryptocurrency Enforcement Team (NCET) will be disbanded immediately. Blanche echoed sentiments prevalent among crypto advocates during the previous election cycle, suggesting that the Biden administration has been engaged in a crackdown on the industry through what some have termed the “weaponization” of regulatory agencies. The Securities and Exchange Commission (SEC) under President Biden, particularly under Chairman Gary Gensler, has been perceived as adversarial toward the crypto sector through its enforcement actions.
### SEC’s Recent Changes Under Trump’s Leadership
Since Trump’s administration, the SEC has reportedly closed several significant investigations and lawsuits involving cryptocurrencies without pursuing enforcement. Notably, the SEC dropped its case against an individual previously charged with marketing unregistered crypto securities after he invested substantial funds into the Trump family’s World Liberty Financial. In a strategic move, Trump has sought to appoint a new SEC chair with personal investments in crypto valued up to $6 million, a change that has been welcomed by fellow investors in the sector. Blanche himself is also an investor in cryptocurrencies, with his public financial disclosure indicating holdings that range between $158,000 and $470,000 in digital assets, including Bitcoin, Ethereum, and Solana.
### Potential Conflicts of Interest and Ethical Considerations
The disclosure highlights that Blanche previously represented CLS Global FZC LLC, a crypto company based in the UAE that faced charges related to market manipulation and wire fraud. This firm had pleaded guilty and is currently undergoing probation, during which it is barred from the U.S. crypto market and required to pay fines totaling $428,059. In light of his new role as Deputy Attorney General, Blanche has committed to divesting his crypto assets within 90 days, as outlined in his ethics agreement. He stated that he would abstain from participating in matters directly affecting his financial interests in virtual currencies until after the divestment, unless he receives a written waiver. Presently, no such waiver is available on the Office of Government Ethics website.
### Crypto Market Reactions to Political Developments
In the wake of Trump’s election, the cryptocurrency market experienced a significant surge, fueled by expectations of more favorable policies and reduced regulatory scrutiny. Bitcoin notably reached a historic price of $100,000 in December. However, recent developments including Trump’s imposition of steep tariffs on foreign imports have led to a decline in digital token values, with Bitcoin dropping to approximately $75,000, marking its lowest point since November. Some members of the crypto community have voiced concerns regarding their diminishing portfolios. Silicon Valley venture capitalist David Sacks, who has been appointed as Trump’s advisor on crypto and AI, attempted to quell these concerns on social media after a prolonged silence amidst the economic turmoil. He referred to a brief recovery in stock prices, only for those gains to be quickly negated as the White House announced plans to raise tariffs on Chinese imports to 104 percent, resulting in another market downturn, with cryptocurrencies following suit.
