Securities Regulation Daily Wrap Up, BLOCKCHAIN—Acting CFTC chair says agency will follow DOJ lead on crypto enforcement, (Apr 9, 2025)
The DOJ recently issued guidance pulling many of its resources devoted to crypto and refocusing them on crimes related to crypto rather than securities- and commodities-based crypto cases.
Acting CFTC Chairman Caroline D. Pham has directed the agency’s enforcement director and other agency staff to adhere to Executive Order No. 14219 regarding the use of agency discretion in enforcement cases. Pham also directed agency staff to adhere to the DOJ’s recent announcement in which it refocused DOJ crypto resources away from securities- and commodities-based cases and instead adopted a policy of emphasizing prosecution of criminal conduct, such as drug dealing and human trafficking, associated with crypto trading.
The steps announcedBy Pham address what she called the Trump Administration’s effort to end “regulation by prosecution.” As a result, Pham directed CFTC staff to “deprioritize” cases based on alleged violations of the Commodity Exchange Act’s (CEA) license or registration provisions absent evidence that a defendant knew of a legal obligation and willfully violated the CEA.
Pham also said she had directed CFTC staff not to take any litigation positions that conflict with the relevant Trump Administration executive orders, Trump Administration policy, or the DOJ’s new policy on prosecuting crypto cases.
“For far too long, lawfare from multiple federal agencies against innovators in the digital asset space has created unfairness and uncertainty that has undermined trust in the regulatory process and impeded American competitiveness,” said Pham via press release. She added that “[t]he CFTC is committed to complying with the President’s executive orders at the heart of this policy and has already taken important steps to end regulation by enforcement and direct limited resources toward fighting fraud and helping victims.”
Part of Pham’s directives to CFTC staff follow Section 3 of Executive Order 14219, which tells agencies to end certain enforcement matters but, more broadly, tells agencies to “preserve their limited enforcement resources by generally de-prioritizing actions to enforce regulations that are based on anything other than the best reading of a statute and de-prioritizing actions to enforce regulations that go beyond the powers vested in the Federal Government by the Constitution.”
CFTC efforts to terminate cases in accord with Trump Administration policies, however, may be delayed because, as Pham conceded in her announcement, the Commission lacks a political majority and thus is unable currently to take the actions requested by the Trump Administration.
Other parts of Pham’s directives to CFTC staff follow the DOJ’s policy memorandum on crypto enforcement, which itself adheres to provisions contained in another Trump executive order (No. 14178). The DOJ policy states that prosecutors should not charge regulatory violations in crypto cases under certain laws (e.g., money transmitter laws, the Bank Secrecy Act, or the securities and commodities laws) absent evidence that the defendant knew of a license or registration violation and willfully violated the applicable law. DOJ was careful to state that the policy is discretionary and is not legally required.
With respect to securities and commodities violations, the DOJ policy states that prosecutors should not pursue cases where the department may have to argue that a crypto asset is or is not a “security” or “commodity” if another charge is sufficient (e.g., mail or wire fraud).
Within the bounds of the new policy on securities and commodities regulatory prosecutions, the DOJ outlined two permitted litigation positions, assuming that the charged offense otherwise fits within the new policy: (1) arguing that bitcoin and ether are commodities under the CEA; and (2) bringing securities fraud charges related to equity or stock in a crypto company. Exceptions would have to be approved by the deputy attorney general.
The DOJ also announced that, as part of its policy shift, the Market Integrity and Major Frauds Unit will stop pursuing crypto cases in favor of other priorities, including immigration and procurement fraud.
Similarly, the DOJ said the National Cryptocurrency Enforcement Team (NCET) had been disbanded. DOJ created the NCET in 2021 to investigate and prosecute “criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.”
The DOJ memorandum announcing the disbandment of the NCET described the change thus: “Specifically, the Department 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-except to the extent the investigation is consistent with the priorities articulated in the following paragraphs” (i.e., the new DOJ policy).
However, DOJ said the Computer Crime and Intellectual Property Section (CCIPS), located within the DOJ’s Criminal Division, would continue to provide training and guidance to DOJ staff and to the crypto industry.
RegulatoryActivity: Blockchain CFTCNews DOGE FinancialIntermediaries FraudManipulation InvestorEducation RiskManagement SecuritiesOfferings Securities FedTracker