On April 3, 2026 (East 8 Time), Trump announced the appointment of former private attorney Todd Blanch as the Acting Attorney General of the United States, and almost simultaneously made two key decisions: disbanding the National Cryptocurrency Enforcement Team (NCET), which had been leading aggressive law enforcement since 2021, and signing an internal memorandum to restrict cryptocurrency regulatory prosecutions. Alongside this abrupt policy shift, Blanch's own crypto asset holdings of approximately $159,000 to $485,000 and his public pro-crypto stance quickly ignited the debate over whether "regulatory policy is being rewritten by personal wallets." The Justice Department, which once deterred the industry with high-pressure prosecutions, suddenly slammed on the brakes, being described by many commentators as a "watershed moment in American cryptocurrency regulation history." The central issues revolving around potential conflicts of interest, whether institutional constraints can suppress personal incentives, and how the market might price this policy pivot formed the main thread of the entire discourse.

From Iron Fist to Sudden Brake: How the Justice Department's Route Turned on a Memorandum

Since its establishment in 2021, the NCET has been viewed as the "sharp weapon" of the U.S. Department of Justice in the cryptocurrency field. It represents a hardline approach centered on criminal prosecution: in a context of legislative lag and a vague regulatory framework, it released high-pressure signals across the industry by selectively targeting exchanges, mixing protocols, and cross-border money laundering channels. The mere existence of such cases has created a significant deterrent in the market—developers and institutions often prefer to over-comply rather than cross the invisible red line drawn by the Department of Justice.

After Blanch took office, this route was quickly put on pause. Shortly after the personnel announcement on April 3, 2026, he pushed for the dissolution of NCET, effectively removing the "central nervous system" responsible for crypto law enforcement within the Department of Justice. Immediately afterward, he signed a memorandum restricting prosecutions in the cryptocurrency sector, setting higher thresholds and stricter review processes for prosecutors initiating chain-related cases in the future. In terms of timing, this is a highly concentrated policy rewrite: before he had fully settled into his seat, the policy had begun to turn.

The Tornado Cash case is the first prominent example of this new route taking shape. Research briefs indicate that this memorandum directly facilitated the withdrawal of some charges in the Tornado Cash case—signifying a substantial retreat from the previous approach that aimed to include developers and maintainers within the scope of criminal liability. For a case that has long been viewed as a "model to be set by regulators" regarding privacy protocols, this is not a technical correction, but a redefinition from the Department of Justice of "who should be held accountable."

More broadly, this rapid shift from "prosecution-driven" to "cautiously restrained" represents a symbolic turning point in the paradigm of U.S. cryptocurrency regulation. In the past, the Department of Justice often filled gray areas with high-profile cases to establish "de facto regulations"; now, the highest level is limiting the applicability of such practices. Regardless of whether future routes will swing back and forth, this turn has communicated a clear message to the market: prosecution is no longer the preferred tool for regulation, at least not in the short term.

The Minister Holds Coins Himself: The Fine Line Between Law and Wallet

Blanch disclosed in his asset declaration that he personally holds approximately $159,000 to $485,000 in cryptocurrency (according to A/C). For ordinary investors, this is just a moderately above-average holding range; but for a key figure who has just taken over the Department of Justice and immediately reshaped the cryptocurrency enforcement policy, the symbolic significance of this number far exceeds its economic scale. The question is not "how much," but rather—when he makes decisions about whether to prosecute or not regarding the future trajectory of the entire cryptocurrency industry, will these assets present a potential incentive?

The U.S. conflict of interest law 18 U.S.C. §208(a) provides a clear framework on this issue: in principle, public officials should not participate in decisions on matters in which they have a "direct and predictable financial interest," requiring a separation through recusal, trust, or other means. However, drawing this line can be difficult in an asset class that is highly generalized and has a massive market capitalization. For example, does a policy adjustment regarding the "overall risks of the Bitcoin ecosystem" constitute a "predictable benefit" for personal holdings? The legal answer often requires case-by-case analysis, while political and public scrutiny tends to be much more direct.

This is also why the widely quoted question arose—"When policymakers hold tokens, are they still making laws?" This statement, thrown out by a federal senator in a public forum (according to C), points to the foundational issue of institutional trust: how can the public be assured that Blanch's considerations in dissolving the NCET and reducing prosecutorial intensity are based on public interest rather than personal gains from his or similar coin holders? Even if he formally meets disclosure and recusal requirements, as long as such questions persist, U.S. cryptocurrency policy will struggle to escape the shadows of moral controversy.

The market's interpretation is far more utilitarian. A Justice Minister financially tied to cryptocurrency assets is viewed as a latent bull for the entire asset class. This easily projects onto expectations of "policy dividends" for specific sectors: investors may speculate whether he is more inclined to adopt a lenient attitude toward certain public chains, privacy protocols, and infrastructure projects, thus "pricing in" these assumptions in advance. Even if Blanch has never publicly endorsed a specific token, his personal wealth structure itself has already been seen by the market as a long-term bullish "invisible pass."

Trump and His Former Private Lawyer: The Synchronized Amplification of Power and Regulatory Narrative

Todd Blanch is not a traditionally defined "career prosecutor type of minister." Outside of cryptocurrency policy, he is better known as Trump's former private lawyer—in multiple sensitive cases, he acted as a defense attorney for Trump’s personal interests. This leap from personal defender to acting Attorney General signifies a shift from "serving one person" to a position that "oversees the national legal machine," a role transition of considerable magnitude that is relatively rare in the U.S. judicial tradition.

The design of the U.S. system emphasizes the relative independence of the judicial branch. Although the president has the appointment authority, they typically weigh factors such as professional reputation, party balance, and degrees of personal distance. Therefore, when Trump chooses to hand this "sword of law" to someone who previously deeply participated in his private defense, the immediate public response centers on one question: who will this sword point to in the future, and who will it avoid? For the cryptocurrency sector, this concern is further layered onto the policy—if the minister is politically very close to the president, while financially tied to cryptocurrency assets, will the Justice Department's future regulatory choices more serve a "Trump-style cryptocurrency vision"?

From a narrative perspective, Trump has continuously released "pro-crypto" signals in recent years, while Blanch's pro-crypto stance and personal holdings provide a carrying vessel for executing this narrative: the president is responsible for telling the story that "America must lead in the cryptocurrency race" in election and public arenas, and the Attorney General carries out actions like dissolving NCET and slowing prosecutions to provide institutional leverage for this narrative. The two amplify each other, pushing a discussion that was originally limited to the margins of policy to the center stage of the U.S. financial order and technological competition.

As a result, there is an increasing tendency among external observers to link this personnel adjustment to Trump's attempt to reshape America's position in the global cryptocurrency discourse. On one hand, this is a counterattack against the past few years' "regulation equates suppression" approach; on the other hand, it sends a signal to the industry: Washington no longer sees cryptocurrency merely as a source of risk but as a tool in geopolitical financial games. The question remains: is this turn a rebalancing at the national strategic level, or a policy gamble amplified by personal relationships and interest structures? It is currently difficult to conclude.

Rewriting the Regulatory Script: From "Prosecution Equals Regulation" to Experimental Release

Reflecting on the past few years, the U.S. has been described as "replacing regulation with prosecution" because, in the context of Congress struggling to form systematic legislation, the Department of Justice and some regulatory agencies (like securities and commodity regulators) effectively assumed the function of "drawing lines" through selective enforcement. Once a certain type of transaction structure is prosecuted, it is immediately categorized in the market's perception as "high risk or even prohibited," even in the absence of explicit legal provisions. The advantages of this model are rapid response and strong deterrence, while the downsides include vague boundaries and poor predictability.

The memorandum restricting cryptocurrency regulatory prosecutions signed by Blanch has applied the brakes on this model. Although the brief did not disclose specific terms, its functional impact is clear: it requires prosecutors to conduct higher-level reviews and cost-benefit assessments before advancing new chain-related cases, avoiding using "demonstrative prosecutions" to preemptively fill rule-making tasks that should be completed by legislative bodies. This implies that we are more likely to see a "watch and see" approach in the future: allowing certain innovations to operate in gray areas first, and then adjust post-factum based on real risks and market effects rather than shutting down options with criminal charges right from the start.

Within this framework, cases like Tornado Cash and Roman Storm carry particularly sensitive signal implications. The brief states that the memorandum has already led to some charges being withdrawn in the Tornado Cash case, while details of the charges related to the Roman Storm case are marked as pending verification. Even without delving into specific procedures, it can be determined that the legal connections between developers and the protocol itself and behaviors such as "money laundering and sanctions evasion" are being re-evaluated. For developers, this may bring greater compliance gray area space—not implying that they can do as they please, but that the Department of Justice is no longer quick to equate "writing code" with "participating in crime."

The pace and extent of impact across different sectors will significantly diverge. Centralized exchanges may experience a shift from "frequent prosecutions" to "increased reliance on administrative and compliance rectification"; DeFi protocols may gain more negotiation leeway between technical neutrality, prevention of malicious exploitation, and compliance responsibilities; while highly sensitive infrastructure like privacy protocols and cross-chain bridges may only transition from the "high-pressure red zone" back to the "heavily controlled gray area" in the short term, but this is enough to change the risk pricing of project teams and capital. Corporate compliance strategies will also adjust accordingly—shifting from “as long as no one gets prosecuted it's fine” to “paying more attention to potential future legislation and cross-agency coordination,” beginning to rethink long-term compliance pathways instead of solely focusing on the Justice Department's moves.

Market and Washington Confrontation: Regulatory Vacuum After the Watershed

In the public forum, this route shift has been directly described by many commentators as: "This is a watershed moment in the history of American cryptocurrency regulation" (Shenchao TechFlow commentary). Supporters believe that the high-pressure prosecution model has exhausted innovation space, and the current brake provides the industry with a window to catch its breath and self-repair; critics worry that this could be interpreted by gray capital and regulatory arbitrageurs as "the wind has changed, we can once again test the limits." The bulls and bears are centered around the same fact but arrive at completely different conclusions—this itself indicates the nature of the watershed: once the direction changes, the consequences take time to validate.

From the perspective of market pricing, the easing of short-term regulatory pressures often directly lifts risk appetite. Cryptocurrency assets are seen as beneficiaries of a "policy upward," partly because the decreased frequency of actions from the Department of Justice itself lowers tail risks, and partly due to Blanch's personal holdings and policy orientation being interpreted as long-term friendly signals. Yet at the same time, concerns about compliance arbitrage and gray production flow are also building up: if the Department of Justice no longer actively plays the role of "stabilizer," some marginal projects and service providers may reattempt to test regulatory boundaries, treating the U.S. market as a "high yield, high risk" experimental ground.

The internal pushback from Washington will not be absent. Congress and the Senate have the capacity to restrain and correct the Justice Department's route through tools such as hearings, investigations, and legislation. It can be expected that there will be more public hearings and inquiries surrounding Blanch's appointment, asset holdings, the dissolution of NCET, and the specific effects of the memorandum; other regulatory agencies may also attempt to fill the gaps left by the Justice Department's retreat through their own rule updates. In other words, this is not a straightforward loosening of regulation, but a cross-agency, multi-level power rebalancing.

In this process, a key concept is the "regulatory vacuum period." When old high-pressure tools are removed and new legislation and rules are not yet in place, the market will be in a transition zone characterized by rising institutional uncertainty yet declining frequency of administrative interventions. For institutional capital, this is both an opportunity and a warning: on one hand, there is the chance to position in areas with potential benefits before regulatory repricing; on the other hand, it must also be recognized that any medium to long-term allocations will be exposed to multiple risks associated with future legislation, inter-agency coordination, and the potential for a renewed shift by the Department of Justice.

New Game of Cryptocurrency Regulation: The Tug of War Between Opportunity Windows and Institutional Bottom Lines

Overall, the appointment of Blanch, the dissolution of NCET, and the signing of the prosecution restriction memorandum, all occurring at this moment on April 3, 2026, effectively draw a clear fault line on the U.S. cryptocurrency regulatory map: the previous model, with NCET as the vanguard and using high-pressure prosecutions to fill regulatory gaps, has been pressed on pause, while a new path focusing on judicial restraint and leaving space for legislation and the market is being tentatively laid out. This is not a simple struggle between "looseness and tightness," but a reassignment of roles between main actors and supporting roles in the regulatory toolbox.

However, under the intertwining structure of personal coin holdings and public decision-making, this shift is bound to remain in a long-term moral questioning and reality interest tug-of-war. On one hand, the delicate balance between Blanch's cryptocurrency asset holdings and conflict of interest laws will continue to be the focus of hearings and public attention; on the other hand, if the market continues to price this combination of "personal bullishness and policy power," it will further reinforce similar appointments’ incentives, making it harder for regulation to return to a "value-neutral" track.

For investors and project teams, the strategic dilemma lies in: how to seize opportunities while controlling institutional risks before the regulatory narrative is fully written. This means, on one hand, paying attention to which sectors gain breathing room and development within the Justice Department's "withdrawal" space, such as decentralized infrastructure, compliance-friendly DeFi forms, etc.; on the other hand, also being vigilant against over-reliance on signals from a single institution or individual for decision-making—Congressional legislation, inter-agency rule cooperation, and the rulings of future landmark cases could change the entire risk-reward structure in months.

In the coming year, there are several key observation points worth following up on: first, whether Congress will accelerate the advancement of framework legislation in the cryptocurrency sector to replace "prosecution equals regulation" with explicit rules; second, how representative cases like Tornado Cash and Roman Storm will materialize the new route in appeals and subsequent processes; third, whether there will be a resurgence of route oscillation within the Department of Justice under political pressure and public opinion trends, or even attempts to replace the dissolved NCET with new institutional forms. Only when these signals gradually become clear can the market truly assess whether this policy pivot is a fleeting tactical adjustment or a structural rewriting of the long-term path of U.S. cryptocurrency regulation.

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