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As the new Republican administration led by President-elect Donald Trump gears up, crypto enthusiasts are predicting a loosened grip on cryptocurrency law enforcement. But don’t get too excited—this comes with a major reshuffle in regulatory priorities.

At a legal conference in New York, seasoned government lawyers (both active and retired) noted that while the Department of Justice will still go after financial fraud cases, their spotlight might shift to immigration law enforcement—one of Trump’s big campaign promises.

Scott Hartman, deputy chief of the securities and commodities fraud unit at the Manhattan U.S. Attorney’s Office, highlighted that resources for monitoring crypto crimes will take a backseat. Those resources, he explained, are being redirected to areas deemed more pressing by the new administration.

In short: less crypto cop drama, but keep an eye out for tighter oversight in other sectors.

High-Profile Crypto Cases: From Sam Bankman-Fried to Shifting Strategies

Hartman shared these insights fresh off the back of his office’s success with high-profile cases, including the trial of FTX founder Sam Bankman-Fried. It seems even the crypto world isn’t immune to courtroom drama!

He noted that while his team has tackled some blockbuster fraud cases, a dwindling number of prosecutors might force other regulators to step up and fill the oversight gap. At a Practising Law Institute event, Hartman reminisced about the “crypto winter” of 2022, which left a trail of fraud cases in its chilly wake.

But with a shakeup in leadership and government priorities on the horizon, the future of crypto enforcement looks anything but frozen. Enter Jay Clayton, rumored to be Trump’s pick for U.S. Attorney in Manhattan. Clayton, who previously led the SEC during Trump’s first term, has a less aggressive stance on crypto compared to his successor, Gary Gensler.

And let’s not forget Gensler—crypto’s current nemesis—who’s been busy cracking down on major players like Coinbase and Binance for alleged registration violations. But with Trump hinting at Gensler’s removal, the crypto industry is bracing for what could be a regulatory thaw.

In other words, it’s like musical chairs for regulators—except the stakes are billions in Bitcoin, not just a seat!

CFTC Sharpens Its Focus on Digital Assets

The Commodity Futures Trading Commission (CFTC), one of the primary watchdogs of the cryptocurrency world, has been keeping an increasingly watchful eye on digital assets in recent years.

According to Ian McGinley, the CFTC’s director of enforcement, nearly half of the cases the commission handled last year were related to cryptocurrency. That’s a lot of crypto drama packed into one regulatory year!

However, McGinley hinted that this trend might not carry over under the new administration. He emphasized that enforcement actions would likely target only the most blatant cases of fraud or market manipulation.

In short, unless you’re plotting the next crypto Ponzi scheme, you might just get a bit more breathing room.

Manhattan U.S. Attorney’s Office Stays Financially Focused (For Now)

The Manhattan U.S. Attorney’s Office, famous for tackling high-stakes financial crimes and corruption, is bracing for a potential shift in priorities as the new administration pivots towards immigration issues.

Steve Peikin, former SEC enforcement chief under Clayton, called Clayton a solid pick for U.S. Attorney. However, he also acknowledged that the Department of Justice’s changing focus could mean stormy seas ahead for financial crime enforcement.

Scott Hartman underscored the importance of keeping his unit’s financial fraud work non-partisan, while expressing concerns about shrinking resources potentially undermining its ability to handle major cases.

Criticism Mounts Against SEC’s Crypto Approach

Meanwhile, the SEC’s “regulation-by-enforcement” strategy continues to rile the crypto industry. Critics argue that instead of providing clear guidelines, the SEC prefers a courtroom showdown with big players in the sector.

In response, seven U.S. states have formed an alliance to challenge the SEC’s approach, arguing it leaves the crypto industry floundering without the legal certainty needed to thrive in the U.S.

The message is clear: Crypto needs a playbook, not just penalties. Will the SEC listen? Stay tuned.

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Madeline

I have been drawn to technology and science fiction since I was a child. Studying IT has drawn me to the world of cryptocurrencies, where I have been working since 2014. I have learned a lot since then. And I still have a lot to learn. What fascinates me most about them is that they connect so many worlds together and the possibility of free choice. Without limits.