Meanwhile, the Trump family’s crypto empire continues to expand. In late March, Eric Trump and Donald Trump, Jr., the president’s sons, announced a new bitcoin mining venture. Shortly before that, the parent company of Truth Social, Trump’s social media platform, entered an agreement to launch a series of crypto exchange-traded funds. President Trump himself has previously issued NFTs, in addition to his memecoin.
At least until July, by which time the US government’s new “working group on digital assets” is required to recommend an approach to overseeing the crypto industry, it will remain unclear which laws and regulations will be enforced against crypto businesses—and by whom. “There was a pretty clear sheriff in town: [former SEC chair Gary] Gensler. Now there’s not,” says LaVigne.
Though the new DOJ orders do not prohibit prosecutors from investigating crypto businesses, the practical realities of the job—the way budget is allocated, how investigations are staffed, the possibility that supervisors may decline to proceed with a case—mean they achieve a similar result, says Daniel Silva, another former prosecutor and attorney at law firm Buchalter.
“If I’m a prosecutor, I’m not sure I’m interested,” says Silva. “If I’m doing long-term, complex financial investigations involving international fraud, I can manage three or four at a time. Am I going to spend years on a [crypto] case that might get declined?”
The upshot is likely to be that crypto firms are left alone to pursue experimental types of crypto tokens, transactions or products, even if they stretch the limits of applicable laws. “If you’re a cryptocurrency company right now, you have a bit more certainty that over the next couple of years your risk tolerance might expand without getting punished as much as it would have,” says Silva.
In a letter to the DOJ on Thursday, six Democrat senators argued that a loosening of the grip on platforms responsible for the flow of crypto assets will lead to dangerous downstream outcomes, too. “Drug traffickers, terrorists, fraudsters, and adversaries will exploit this vulnerability on a large scale,” the letter states.
The DOJ’s position may not, though, be the free pass that it seems, claims Joshua Naftalis, a former prosecutor who is currently a partner at law firm Pallas Partners. Although the DOJ is likely to pursue only few crypto-related cases under Trump, he says, businesses cannot be assured that present day infractions will not be punished by future administrations. That should temper the crypto industry’s willingness to flout, say, anti-money laundering requirements.
“I’m sure it’s a breath of relief for the crypto industry,” says Naftalis. “But there’s a statute of limitations. A different president could always go back and charge these cases. It would be a false sense of security.”
Equally, the DOJ will continue to draw a hard line at fraud, the former prosecutors claim. “You cannot just commit flagrant financial crimes and expect no one to look at it,” says Silva.
There is a degree to which all parties—from crypto businesses to the prosecutors tasked with these new orders—will be required to read between the lines. “The signal is that the industry is not in the doghouse anymore,” says Naftalis. “They still have to comply with the laws. The question is which ones will be enforced—and by whom?”