Donald Trump’s presidential campaign has garnered significant financial support from cryptocurrency firms and affluent investors within the sector. In exchange, Trump has expressed his ambition to position the United States as the “crypto capital of the world.” He has taken steps such as signing an executive order aimed at “strengthening American leadership in digital financial technology,” while also announcing plans for a U.S. strategic bitcoin reserve and a digital asset stockpile. Both Trump and his family have embraced the crypto world, with the former president and his wife, Melania, launching their own meme coins. Additionally, the Trump family has established their own cryptocurrency exchange, World Liberty Financial, and Trump’s sons, Eric and Don Jr., have recently founded a Bitcoin mining enterprise.
Justice Department Shifts Focus on Crypto Investigations
Recently, Trump’s Justice Department announced that it would halt its investigations into cryptocurrency fraud. This decision comes in light of a memo issued by U.S. Deputy Attorney General Todd Blanche, who previously represented Trump in a trial where he was found guilty on 34 felony counts related to falsifying business records. The memo clarified that the Justice Department will no longer engage in litigation or enforcement actions that impose regulatory frameworks on digital assets, asserting that the DOJ does not serve as a regulator for digital currencies. Instead, investigations will now concentrate on prosecuting individuals who exploit digital asset investors or engage in criminal activities such as terrorism, drug trafficking, organized crime, hacking, and financing for gangs or cartels.
The memo further outlined that the Market Integrity and Major Frauds Unit will cease its cryptocurrency enforcement efforts to redirect attention to other priorities, such as immigration and procurement fraud. Additionally, the National Cryptocurrency Enforcement Team (NCET) will be disbanded immediately. Blanche echoed sentiments frequently voiced by crypto advocates during the previous election cycle, suggesting that the Biden administration has been engaged in a crackdown on the cryptocurrency sector by “weaponizing” regulatory agencies. The Securities and Exchange Commission (SEC), led by Chairman Gary Gensler, has been perceived as particularly antagonistic towards cryptocurrency, implementing aggressive enforcement actions.
Changes Under Trump’s Administration
Under Trump’s administration, the SEC has notably closed significant investigations and lawsuits concerning cryptocurrencies without taking any enforcement actions. One case involved the dismissal of charges against an individual accused of marketing unregistered crypto securities and manipulating the market for a crypto token, following his investment of tens of millions of dollars into the Trump family’s World Liberty Financial. Furthermore, Trump has sought to appoint a new SEC chair known for holding up to $6 million in crypto-related assets, a move welcomed by other investors in the space. Blanche himself is also a cryptocurrency investor, with his public financial disclosure indicating that his digital assets—comprising bitcoin, ethereum, and solana—are valued between $158,000 and $470,000.
The disclosure reveals that Blanche previously represented CLS Global FZC LLC, a crypto firm based in the United Arab Emirates, which faced charges for conspiracy to commit market manipulation and wire fraud. The firm ultimately pleaded guilty to these charges and received a three-year probation sentence, barred from participating in U.S. crypto markets and ordered to pay $428,059 in fines and seized assets. CLS had been under investigation for “wash trading,” a deceptive practice designed to create the illusion of trading activity to attract investments. In his ethics agreement for his role as U.S. Deputy Attorney General, Blanche committed to divesting his cryptocurrency holdings within 90 days of assuming office, stating he would refrain from participating in any matters that could directly impact his financial interests in the virtual currency until he divested, unless he obtained a written waiver.
Crypto Market Reactions to Economic Developments
The cryptocurrency market witnessed a remarkable surge following Trump’s election, fueled by expectations of a more favorable policy environment and reduced regulatory scrutiny, with Bitcoin reaching a historic price of $100,000 for the first time in December. However, recent developments have seen digital assets decline sharply alongside global markets, particularly in response to Trump’s imposing tariffs on foreign imports. On Monday, Bitcoin dropped to approximately $75,000, marking its lowest value since November, leading to discontent among investors within the crypto community.
Silicon Valley venture capitalist David Sacks, who has taken on the role of Trump’s advisor for crypto and AI, attempted to alleviate concerns on social media after remaining silent amid the recent economic turmoil. He referred to the initial recovery in stock prices as the “Black Monday Hoax” but these gains were quickly negated following the White House’s announcement of a 104 percent tariff rate on Chinese imports, which caused markets to plummet once more, dragging cryptocurrencies down with them.
