The Trump administration’s deregulation of crypto enforcement

President Donald Trump and his administration brought a significant shift to the crypto policy in the US.

This change marked a departure from the stringent regulatory approach of the previous Biden administration, moving towards a permissive and supporting stance.

During President Joe Biden’s tenure, federal agencies intensified their scrutiny of the crypto industry. The Department of Justice (DOJ) established the National Cryptocurrency Enforcement Team (NCET) in 2021 to combat crypto-related crimes. Simultaneously, under Chair Gary Gensler, the Securities and Exchange Commission (SEC) pursued numerous enforcement actions against major exchanges, including Coinbase and Binance, for alleged securities violations.

In 2023 alone, the SEC initiated 46 crypto-related enforcement actions, marking a 53% increase from the previous year.

The Biden administration also employed indirect measures to limit crypto’s growth. Agencies such as the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve issued guidance discouraging banks from engaging with crypto firms, effectively debanking parts of the industry.

This strategy, reminiscent of the original Operation Choke Point, aimed to mitigate perceived risks associated with digital assets.

This is why the policy shift under the Trump administration was met with enthusiasm by many in the crypto industry. Exchanges, institutional investors, and retail traders see this deregulation as an opportunity for growth and innovation.

With reduced regulatory pressures and an aggressive move towards a national Bitcoin reserve, the industry anticipates a much more favorable environment in the next four years.

In this report, CryptoSlate will dive deep into the policy reversal that has reshaped the relationship between the US federal government and the crypto industry.

We will examine the aggressive enforcement campaign under the Biden administration, detailing key actions from the DOJ, SEC, and banking regulators, including creating the National Cryptocurrency Enforcement Team and the broader strategy known as Operation Choke Point 2.0.

The report will then analyze how the Trump administration has dismantled much of that framework in 2025 through Executive Order 14178 and the disbanding of the NCET.

By comparing regulatory priorities across administrations, assessing specific case withdrawals, and exploring the legal and market implications of this transition, the report aims to provide a thorough breakdown of the United States’ evolving approach to digital asset oversight.

From 2021 through early 2025, the Biden administration adopted an aggressive regulatory posture toward the crypto industry.

Federal agencies, including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), initiated numerous enforcement actions targeting major crypto exchanges, developers, and service providers.

This period was marked by heightened scrutiny, legal challenges, and a concerted effort to apply existing financial regulations to the rapidly evolving digital asset landscape.

Aggressive legal actions

In February 2022, the DOJ established the National Cryptocurrency Enforcement Team (NCET) to address the criminal misuse of digital assets. The NCET focused on investigating and prosecuting crypto-related crimes, including money laundering, cybercrime, and the operation of unlicensed money services businesses.

The team collaborated with various DOJ components and federal agencies to pursue cases involving virtual currency exchanges, mixing and tumbling services, and other entities facilitating illicit activities.

Under Chair Gary Gensler, the SEC intensified its oversight of the crypto industry. In June 2023, the SEC filed 13 charges against Binance Holdings Ltd., its US-based affiliate BAM Trading Services Inc., and founder Changpeng Zhao.

The charges included operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls; and the unregistered offer and sale of securities. The SEC alleged that Binance and Zhao engaged in an extensive web of deception, conflicts of interest, and lack of disclosure, putting investors at risk.

The following day, the SEC charged Coinbase, Inc. with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency.

The SEC also charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program. These actions signaled the SEC’s intent to apply traditional securities laws to digital asset platforms and services.

In August 2023, the DOJ indicted Tornado Cash developers Roman Storm and Roman Semenov on charges of laundering over $1 billion in criminal proceeds, violating U.S. sanctions, and operating an unlicensed money-transmitting business.

The indictment alleged that Tornado Cash was used to conceal the origin and destination of illicit funds, including those associated with North Korean cybercriminals.

The CFTC also took action against Binance and Zhao in March 2023, filing a lawsuit alleging willful evasion of U.S. law and breaches of derivatives rules. The CFTC accused Binance of failing to implement adequate compliance measures to prevent and detect money laundering and terrorist financing.

Operation Choke Point 2.0: Financial strangulation

Beyond direct enforcement actions, the Biden administration employed indirect methods to limit the crypto industry’s growth. This approach, dubbed “Operation Choke Point 2.0” by venture capitalist Nic Carter, involved federal agencies pressuring banks to sever ties with crypto firms.

The FDIC, Office of the Comptroller of the Currency (OCC), and Federal Reserve issued guidance discouraging financial institutions from providing services to digital asset companies, citing fraud and money laundering risks.

In early 2025, both the House Committee on Financial Services and the Senate Banking Committee held hearings to investigate these debanking practices.

Crypto executives testified about the challenges they faced in maintaining banking relationships, alleging that regulatory pressure effectively isolated them from the traditional financial system. Representative French Hill criticized the policy, stating it “nearly severed the digital asset ecosystem from financial institutions.”

Regulatory overreach and industry backlash

The Biden administration’s aggressive regulatory stance drew criticism from the industry, with many arguing that the lack of clear guidelines and the application of outdated laws stifled innovation.

The SEC’s reliance on the Howey Test, a 1946 Supreme Court decision to determine whether digital assets are securities, was seen as ill-suited to the decentralized nature of digital assets. This approach led to uncertainty and legal challenges, with companies like Coinbase filing petitions for the SEC to establish clear rules for the crypto industry.

The cumulative effect of these enforcement actions and regulatory pressures contributed to a challenging environment for crypto firms operating in the United States. Many companies considered relocating to more crypto-friendly jurisdictions, citing the U.S. regulatory landscape as unpredictable and hostile to innovation.

Upon returning to office in January 2025, President Donald Trump initiated a significant overhaul of federal crypto policy. This marked a significant departure from the stringent regulatory approach of the previous administration and a continuation of some of the promises made on the campaign trail.

Executive Order 14178

On Jan. 23, 2025, President Donald Trump signed Executive Order 14178, titled “Strengthening American Leadership in Digital Financial Technology.” This order revoked Executive Order 14067 and the Department of the Treasury’s Framework for International Engagement on Digital Assets. Key provisions of the new order included:

• Prohibiting establishing, issuing, or promoting a central bank digital currency (CBDC) within the United States.
• Establishing the Presidential Working Group on Digital Asset Markets to develop a federal regulatory framework for digital assets within 180 days.
• Promoting the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.
• Ensuring fair and open access to banking services for all law-abiding individuals and private-sector entities.

The executive order established the Presidential Working Group on Digital Asset Markets, tasked with developing a federal regulatory framework for digital assets within 180 days.

This group comprises key officials from the Treasury Department, Department of Justice, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and other relevant agencies. Their mandate includes evaluating the creation of a national digital asset stockpile and providing recommendations to foster the growth of the crypto industry.

In alignment with the order’s objectives, the administration has taken several concrete steps to support the digital asset sector. On Mar. 6, 2025, President Trump signed an additional executive order to establish a Strategic Bitcoin Reserve and a US Digital Asset Stockpile.

The Strategic Bitcoin Reserve is to be capitalized with bitcoin assets seized through law enforcement actions, which the government will retain as a reserve asset. The Digital Asset Stockpile will consist of other digital assets obtained through these and other “budget neutral” means.

Furthermore, the administration has taken legislative action to reinforce its pro-crypto stance. On Apr. 10, 2025, President Trump signed a bill nullifying a revised IRS rule that sought to classify decentralized crypto exchanges (DeFi) as brokers, thereby subjecting them to tax reporting requirements. This move was in response to industry concerns that DeFi platforms lack the necessary user data to meet such requirements.

Disbanding enforcement units

In alignment with Executive Order 14178, the Department of Justice (DOJ) disbanded the National Cryptocurrency Enforcement Team (NCET) in April 2025. Established in 2021, the NCET focused on investigating and prosecuting crypto-related crimes.

Deputy Attorney General Todd Blanche issued a memo stating that the DOJ would cease regulatory enforcement actions on digital assets and instead prioritize cases involving significant criminal activities. Ongoing investigations inconsistent with this new policy were to be closed.

The Securities and Exchange Commission (SEC) also adjusted its approach. In February 2025, the SEC dismissed its lawsuit against Coinbase, which had alleged that the company operated as an unregistered securities exchange. Similarly, the SEC dropped its case against Kraken, which had faced allegations of operating as an unregistered broker and mixing customer assets with its own funds.

Focus on major crimes

The DOJ’s revised strategy emphasized targeting individuals and entities that use digital assets to facilitate serious criminal activities, such as terrorism financing, narcotics trafficking, human trafficking, organized crime, and hacking.

The department clarified that it would not pursue regulatory violations under federal banking, securities, and commodities laws unless there was evidence of willful misconduct. This approach aimed to allocate resources more effectively by concentrating on cases with significant criminal implications.

This policy shift has been met with mixed reactions. Proponents argue that it reduces unnecessary regulatory burdens and encourages innovation in the crypto industry. Critics, however, express concerns that diminished oversight could increase illicit activities and undermine investor protections.

The Trump administration’s deregulatory approach to crypto has had multifaceted impacts on the industry. While it has spurred innovation and market expansion, it has also raised concerns about potential risks associated with reduced oversight.

The immediate market response to the administration’s policies was a surge in optimism. Bitcoin reached a record high of $107,000 in November 2024, reflecting investor confidence in the new regulatory environment.

However, subsequent economic policies, such as the imposition of tariffs, introduced volatility. For instance, following the announcement of new tariffs on Apr. 2, 2025, Bitcoin’s price dropped from nearly $88,000 to under $80,000. This indicates that while deregulation initially boosted market sentiment, external economic factors continue to influence prices.

Nonetheless, the relaxed regulatory environment has encouraged significant growth and innovation within the U.S. crypto sector. Companies like Kraken have expanded their services, launching commission-free trading for over 11,000 U.S.-listed stocks and ETFs, signaling a convergence between traditional finance and digital assets.

Additionally, the establishment of the Strategic Bitcoin Reserve shows the administration’s commitment to integrating digital assets into the national financial strategy.

Despite the positive developments, the deregulatory approach has raised legal and ethical concerns. Critics argue that reduced oversight may lead to increased fraudulent activities and financial instability.

For example, the Department of Justice’s decision to disband the National Cryptocurrency Enforcement Team and focus solely on major crimes like terrorism and drug trafficking has been viewed by some as creating an enforcement vacuum. Additionally, the SEC’s withdrawal from lawsuits against major crypto firms, including Coinbase and Kraken, has sparked debates about the adequacy of investor protections.

Furthermore, the growing involvement of political figures in the crypto industry has led to allegations of conflicts of interest. The Trump family’s backing of World Liberty Financial, a crypto firm that launched its own stablecoin, USD1, has been criticized for potential ethical implications, especially following the SEC’s dismissal of a case against a major investor in the firm.

The launch of TRUMP and MELANIA coins also fueled the fire, given the billions in trading volume the tokens saw immediately after launch.

The current deregulated environment in the United States presents both opportunities and vulnerabilities for the digital asset sector. While the rollback of enforcement initiatives and regulatory mandates has created space for innovation, the lack of clear legal boundaries introduces considerable uncertainty, especially for institutional players navigating compliance obligations.

Data presented throughout this report points to a meaningful reorientation of federal priorities. The DOJ’s disbanding of the National Cryptocurrency Enforcement Team and its narrowed mandate to focus only on crimes such as terrorism financing, money laundering, and large-scale fraud indicates a resource-conserving approach rather than a systemic framework for market supervision.

This hands-off model effectively leaves regulatory enforcement fragmented and reactive, not preemptive. For firms operating within this environment, this means fewer day-to-day legal risks. Still, it also means a higher potential for delayed and severe consequences in the event of misconduct or external legal challenges.

The short-term reaction has been clear for investors: risk appetite has expanded. Bitcoin surged to an all-time high of $109,000 in January, and capital inflows into US-based digital asset platforms increased as companies anticipated a more business-friendly regulatory regime.

However, the same volatility that lifted markets has also exposed them to broader macro and geopolitical shocks. The market retracement we’ve seen in April following the announcement of tariffs is a case in point. With fewer regulatory channels, market stability now depends more heavily on macroeconomic resilience and liquidity conditions than on an oversight framework.

The dismantling of regulatory guardrails may also dampen global cooperation. Cross-border compliance, already a complex area, could become more difficult when the US sends mixed signals, retreating from enforcement while still claiming leadership in digital asset development.

Jurisdictions like the EU, operating under MiCA, or Hong Kong, with its licensing regime, may become preferred destinations for firms seeking both market access and regulatory clarity.

Crypto firms must self-regulate more actively to operate effectively in this evolving landscape. This involves implementing internal compliance frameworks, continuously engaging with legal counsel, and anticipating regulatory changes before they are enforced.

Larger entities, in particular, may choose to adopt standards higher than those currently required in anticipation of future scrutiny or a political reversal in 2028.

For institutional investors, portfolio allocation decisions must now factor in regulatory durability, not just near-term market performance. This includes examining exposure to tokens or platforms that may face scrutiny under a future administration and stress testing holdings for policy risk, much like one would for interest rate or credit risk.

Ultimately, deregulation without a roadmap leaves the crypto sector in a state of suspended adaptation.

While the Trump administration’s actions have opened the door for accelerated growth, they have also placed the burden of governance on the industry itself.

Those who respond with foresight and structural maturity will be best positioned to lead the next phase of the crypto market’s expansion, both in tUS.S. and globally.