Adding to the turmoil in the cryptocurrency industry over the past year, the Justice Department has been more actively pushing criminal enforcement actions around cryptocurrencies and other digital assets.
For observers of regulatory activity in this space, the DOJ's priorities come as no surprise. Announcements last year by the White House and Justice Department point in the direction that resources for digital asset enforcement will only increase, and with it, more prosecutorial firepower targeting criminal misconduct. cryptocurrency industry.
The compliance priorities of the Department of Justice and the White House increase the risks for financial institutions involved in the transmission of digital assets, leading internal departments to stay ahead of the compliance march.
Digital Assets Coordination
On September 16, 2022, the Department of Justice announced a new nationwide network of federal prosecutors digital asset coordinators as part of its response to President Joe Biden's March 2022 proposal. executive order.
This network will be comprised of more than 150 federal prosecutors in US attorney's offices across the country and in various DOJ offices in Washington, DC. These experts will develop best practices for investigating and prosecuting alleged crimes involving digital assets.
In the world of blockchain, where new tokens, currencies, and other digital assets are created and exchanged every day, the Department of Justice believes that having more prosecutorial resources to develop expertise in the field will help it identify and better stop crypto criminals. Similar networks of prosecutors have been deployed successfully in areas such as crimes against intellectual property and the fight against terrorism.
The network will work with the DOJ National Cryptocurrency Compliance Teamestablished in late 2021, to bolster prosecution resources and develop expertise in the investigation and prosecution of cryptocurrency-related crimes.
strategic priorities
In addition to this initiative, the DOJ proposed Three regulatory and legislative priorities to combat cryptocurrency-related crime.
The first priority is to amend the anti-whistleblower law so that financial institutions include digital assets, which would make it a crime for officials or agents of financial institutions to inform customers when authorities search their records. By including digital assets in anti-tipping law, law enforcement officials make it harder for clients to evade detection, gaining another arrow in their investigative quiver.
The second priority is to strengthen penalties and broaden the enforcement of criminal laws governing the operation of an unlicensed money transmission business. This proposal would give the Department of Justice and other federal enforcement agencies more power to regulate and prosecute digital asset exchanges and other financial institutions involved in the transmission of cryptocurrency.
The DOJ's third priority is to increase the statute of limitations to 10 years for all crimes involving the transfer of digital assets. This will allow the Justice Department to methodically investigate complicated crypto crime allegations.
When combined with the establishment of the DAC network, these priority proposals bolster DOJ's arsenal for investigating and prosecuting suspected digital asset crimes, while increasing compliance risk for financial institutions involved in the transmission of digital assets.
White House priorities
In parallel with the Department of Justice, the White House announced additional priorities for regulatory and compliance agencies in the digital asset industry. For the Securities and Exchange Commission and the Commodity Futures Trading Commission, the Biden administration encouraged aggressive investigations and enforcement actions against alleged illegal practices in the digital asset space.
SEC Chairman Gary Gensler has already filed or settled over 30 cryptocurrency-related lawsuits, and we can expect more to come. For the Treasury Department, the White House has committed to devoting more resources to identifying, tracking, and analyzing risks related to digital asset markets, as well as completing an illicit financing risk assessment in decentralized finance by the end of February and a evaluation of non-expendable tokens for July.
The expansion of enforcement resources to combat alleged digital asset crimes indicates that the law is coming after cryptocurrency bad actors. As the Department of Justice expands the ability of federal prosecutors and federal law enforcement officers to understand and police the digital asset industry, the cryptocurrency industry must strengthen compliance by understanding related laws and regulations and anticipation of future changes that may result from proposals from the Department of Justice or the White House. .
This article does not necessarily reflect the views of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Write for Us: Guidelines for Authors
Author information
Andres S. Boutros is regional president of Dechert's white-collar practice. A former federal prosecutor, he handles white collar matters, internal and cross-border investigations, and complex litigation. He is also a professor of law at the University of Chicago Law School.
david n kelley is a senior partner at Dechert and a former US attorney for the Southern District of New York. He has more than three decades of experience in commercial litigation, federal securities, grand jury investigations, and congressional investigations.
John R. ("Jay") Schleppenbach He is an attorney in Dechert's white-collar practice, where he represents major corporations in internal investigations and litigated matters. A former appellate prosecutor, he also served as coach of the international arbitration moot court team at Northwestern Law.
