CFTC Orders Crypto Prosecution Slowdown Following DOJ's Explosive Policy Overhaul

The CFTC has unleashed a major overhaul of crypto enforcement, slamming the brakes on punitive regulation and shifting power back to innovators.

CFTC Aligns Crypto Enforcement With DOJ—Low-Level Violations No Longer Chased

Acting Chair of the U.S. Commodity Futures Trading Commission (CFTC) Caroline D. Pham issued a sweeping directive on Monday in Washington D.C., reshaping the agency’s enforcement priorities in the digital asset sector.

Her announcement followed a policy shift by the U.S. Department of Justice (DOJ), which moved to end the controversial practice of regulating cryptocurrency through prosecution rather than clear rulemaking. In response, Pham instructed CFTC staff to halt the pursuit of digital asset-related registration violations unless there is clear evidence of intentional wrongdoing, signaling an end to what she described as years of punitive overreach.

Pham sharply criticized past federal actions targeting blockchain and crypto innovators:

For far too long, lawfare from multiple federal agencies against innovators in the digital asset space has created unfairness and uncertainty that has undermined trust in the regulatory process and impeded American competitiveness.

Acting Chair Pham said. In her directive, she limited the scope of enforcement to deliberate legal breaches: “In order to finally end the CFTC’s regulation by enforcement over the past several years, I direct the CFTC staff and the Director of Enforcement, consistent with DOJ policy, to not seek to ‘charge regulatory violations in cases involving digital assets,’ in particular ‘violations of registration requirements under the Commodity Exchange Act,’ unless ‘there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully.’”

Her statement aligned with Executive Order 14219 and the DOJ’s updated charging guidelines, reinforcing a shift away from using legal action as a proxy for policy clarity. President Trump issued Executive Order 14219 in February, directing federal agencies to review and eliminate regulations that are unconstitutional, based on improper legislative delegation, or impose high costs without clear public benefit. That same month, the DOJ issued new policy directives, including a memo on charging, plea deals, and sentencing that instructed prosecutors to pursue the most serious and readily provable offenses. Moreover, the DOJ will no longer maintain a dedicated unit to investigate cryptocurrency-related offenses.

With the Commission currently divided and unable to secure a majority vote to dismiss or settle ongoing litigation, Pham instead used her executive authority to instruct CFTC staff to deprioritize low-impact violations. Her directive signals a strategic redirection of enforcement efforts, reserving agency resources for combating fraud, manipulation, and clear-cut violations of law. By narrowing the focus of prosecutions, the CFTC aims to restore certainty to digital asset markets while avoiding unnecessary entanglement in cases lacking evidence of willful misconduct.