By Sarah N. Lynch and Chris Prentice
WASHINGTON (Reuters) -The U.S. Justice Department is disbanding its National Cryptocurrency Enforcement Team and ordering prosecutors to focus instead on criminal investigations involving cartels and terrorist groups that use digital currency to finance illicit business, according to a memo seen by Reuters.
The memo from Deputy Attorney General Todd Blanche, sent out to employees late on Monday night, blamed former Democratic President Joe Biden’s administration for previously pursuing a “reckless strategy of regulation by prosecution” of the digital asset sector.
Going forward, Blanche said, the department will instead prioritize investigations into “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.”
Ongoing investigations that are “inconsistent” with this new policy “should be closed,” Blanche wrote.
A Justice Department spokesperson could not be immediately reached for comment.
President Donald Trump has repeatedly called for easing regulations over the digital asset industry, in which he also has a personal stake.
Reuters previously reported that the Trump family has a claim on 75% of net revenues from token sales by World Liberty Financial, a crypto venture.
Ahead of his inauguration, Trump also launched a crypto token. The companies behind the “meme coins” $TRUMP and $MELANIA, for first lady Melania Trump, said they are not investments or securities but are an “expression of support.”
Blanche’s memo on Monday cited one of Trump’s executive orders as the basis for his directive. That executive order calls for the government to help ensure that both individuals and private sector companies can access “open blockchain networks without persecution.
The memo said that the Justice Department will stop targeting virtual currency exchanges, mixing and tumbling services, and offline wallets for “acts of their end users or unwitting violations of regulations.”
The memo also orders prosecutors not to charge regulatory violations under federal banking, securities and commodities laws unless there is evidence that the company or individual willfully violated licensing or registration requirements.
Blanche was one of President Trump’s former criminal defense attorneys and was confirmed last month in his role as Deputy Attorney General, the No. 2 role at the Justice Department.
(Reporting by Chris Prentice and Sarah N. Lynch; Editing by Andrew Cawthorne and Louise Heavens)