Sea Change or Same as It Ever Was? The Crypto Landscape at the ABA White Collar Crime Institute

The session on “Developments in Crypto and Digital Currency” at this year’s ABA White Collar Crime Institute offered a cross-section of perspectives — industry, regulator, and outside counsel — at what is, by almost any measure, a genuinely pivotal moment for the digital assets space.

The panel discussed the full enforcement landscape: the U.S. Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC) — as well as the increasingly active state level. The conference occurred at an unusually consequential moment: major legislative initiatives still unresolved, significant changes at the enforcement agencies, and state regulators increasingly filling gaps left by Washington, D.C. Whether the tides were actually turning, or just looked that way from the San Diego shoreline, was the question of the hour.

DOJ’s Crypto Enforcement Shift — Or Same As Ever?

This administration’s most significant messaging on crypto at DOJ came early. An April 2025 DOJ directive narrowed crypto prosecution priorities to cases involving transnational criminal organizations, terrorist financing, and sanctions evasion by hostile state actors, and sent a message that DOJ should end the pursuit of “regulatory” cases focused on whether a token is a security or whether an exchange is a licensed money transmitter. Fraud and money laundering cases with a crypto dimension were to continue.

Our take is that the administration’s policy shift is considerably less of a sea change than its fanfare suggested. DOJ has always pursued crypto cases principally as fraud, money laundering, and other substantive crimes — the “conduct” has always been the charge. Indeed, its most significant digital asset platform cases — dating back more than a decade — were focused on criminal enterprises that operated as money-laundering conduits for serious criminal conduct, including narcotics trafficking, hacking, fraud, and sanctions evasion, or were actually conduits for investor fraud or theft. And while the current administration has expressly narrowed the focus for prosecutors away from companies and industry figures facing registration or asset classification questions, and toward what one panelist called “notorious bad guys” — transnational criminal organizations, terrorist financiers, and sanctioned state actors—the number of “pure” registration or “status” cases involving digital asset platforms with no other substantive criminal allegations at DOJ (as opposed to the regulators) were next to none.

A quick look at the most recent digital asset DOJ prosecutions illustrates the continuity of the work across administrations. In May 2025, DOJ obtained a jury verdict against SafeMoon CEO Braden John Karony on securities fraud, wire fraud, and money laundering counts; in February 2026, Karony received a 100-month sentence. The Karony case echoes the FTX prosecution from the last administration: like Samuel Bankman-Fried, Karony faced charges centered on alleged misappropriation of customer funds and investor fraud — not contested questions of asset classification or registration status. In June 2025, the D.C. U.S. Attorney’s Office filed a civil forfeiture complaint for more than $225 million tied to cryptocurrency confidence schemes. Confidence scheme forfeitures of this kind — aggressively pursued as “pig butchering” cases by DOJ prosecutors during the prior administration, who wrote the playbook on disrupting this activity through seizures with a $112 million seizure back in 2023 — remain squarely within the new enforcement priorities, because they involve clear fraud and theft rather than any contested regulatory classification. These efforts reached a pinnacle in October 2025, when DOJ unsealed an indictment against the chairman of Cambodia’s Prince Group — alleging that he ran a worldwide crypto scam — and moved to forfeit approximately $15 billion in Bitcoin.

Of course, the instruction to close ongoing investigations “inconsistent” with the new priorities may have produced some “quiet exits” by DOJ from cases that, by their nature, we won’t easily be able to count. But the overall picture is that a federal enforcement apparatus that has narrowed its ambitions — focusing on how money is moving, where it is going, and who is behind it, rather than on registration and asset classification questions — impacts the nature of the work of regulators more than it does DOJ, which always cared about how digital asset technology was exploited and misused by bad actors.

The Tornado Cash prosecution is the best illustration that it is business as usual. Roman Storm, co-founder of Tornado Cash, faced charges in 2023 for conspiracy to commit money laundering, operate an unlicensed money transmitting business, and violate sanctions. His prosecution proceeded to trial in July 2025 notwithstanding the administration’s anti-regulatory-prosecution stance — with DOJ dropping the FinCEN registration theory but pressing forward on the others. In August 2025, a Southern District of New York jury delivered a split verdict: conviction on one count of unlicensed money transmitting, but a hung jury on the more serious money laundering and sanctions conspiracy counts. DOJ is now seeking a retrial. The Tornado Cash case is a useful reminder that “policy” at DOJ is not the same as “binding instruction,” and that individual U.S. Attorneys retain significant discretion. Counsel advising clients with any exposure to mixing, privacy protocols, or similar infrastructure should not read the administration’s pro-industry rhetoric as a blanket safe harbor.

The SEC and CFTC: Getting Back to Basics — and Getting Coordinated

The panel also addressed the SEC’s well-publicized withdrawal from major crypto enforcement actions and the agency’s pivot toward a rules-based framework. The SEC is refocusing on core fraud, manipulation, and disclosure violations rather than stand-alone registration cases that turn on contested asset classification questions. The SEC’s retreat from enforcement has been pronounced: according to one panelist, crypto investigations have dropped by roughly 60%, and the agency has abandoned a number of cases it had previously brought.

The most recent significant development in this space is the January 30, 2026 announcement that the SEC and CFTC are formally joining forces under a unified “Project Crypto” initiative. CFTC Chairman Michael Selig — newly confirmed and appearing to be in genuine coordination with SEC Chairman Paul Atkins — announced that the two agencies will partner on a shared crypto asset taxonomy, a memorandum of understanding on information sharing and surveillance, and coordinated rulemaking designed to eliminate duplicative compliance obligations. Delineating the SEC-CFTC jurisdictional boundary is the central near-term priority, with both chairs broadly aligned on the view that many secondary-market crypto assets are not securities.

The coordinated posture was broadly welcomed — as regulatory clarity is a principle we can get behind. But there are limits to that optimism in the absence of a final legislative framework. Guidance, no-action letters, and enforcement retreat don’t have the durability of statute — which brings us to the elephant in the room …

The CLARITY Act: So Close, and Yet

If the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) was the first major legislative victory — signed by President Trump on July 18, 2025, establishing a federal framework for payment stablecoins and removing them from SEC and CFTC jurisdiction as securities or commodities — the CLARITY Act is where the story gets complicated.

The Digital Asset Market Clarity Act passed the House in July 2025 with a bipartisan vote of 294 to 134. It would establish clear jurisdictional lines between the SEC and CFTC, define the distinction between digital commodities and securities based on how mature a particular digital asset is, give the CFTC primary jurisdiction over most crypto, and create structured registration pathways for crypto intermediaries.

The Senate has been a different story. Senate Banking Committee markups scheduled for January 2026 were postponed indefinitely after leading industry participants withdrew support from the revised text, largely over provisions viewed as unduly favorable to traditional finance on the questions of stablecoin yield and tokenization. By early March 2026, the American Bankers Association formally rejected a White House-brokered compromise, and President Trump took to Truth Social to accuse banks of holding the bill “hostage.” As of this conference, the Senate Banking Committee is eyeing a mid-to-late March markup window as a second attempt, with no confirmed date and the midterm election calendar beginning to loom.

The core sticking point is stablecoin yield — specifically, whether stablecoin issuers can pay interest or yield-like rewards to holders. Banks view stablecoin yield as an existential competitive threat to deposit products; the crypto industry counters that banks’ credit-creation monopoly is a legacy constraint the market should be free to evolve beyond. The administration has sided with the exchanges, but everything needs to happen within a very narrow legislative window.

One notable development that complicates the Senate picture: while Senate Banking has struggled to get a bill out of committee, the Senate Agriculture Committee advanced its own bill — the Digital Commodity Intermediaries Act (DCIA, S. 3755) — out of committee on January 29, 2026, on a party-line vote. The DCIA builds on the House-passed CLARITY Act and focuses on the CFTC’s side of the jurisdictional divide: it would define “digital commodities,” give the CFTC regulatory authority over spot-market transactions in those assets when conducted through registered intermediaries, and create registration and compliance regimes for digital commodity exchanges, brokers, and dealers. That puts it ahead of Senate Banking in the procedural queue — but both bills will ultimately need to be reconciled with each other and with the House-passed CLARITY Act before anything reaches the floor. The path to a comprehensive market structure law, therefore, runs through three separate legislative texts, each reflecting different jurisdictional equities and political pressures.

The GENIUS Act presents its own unfinished business. While the statute was enacted, it triggered an extensive rulemaking process: the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and U.S. Department of the Treasury (Treasury) are all in various stages of implementing regulations required to be finalized by July 2026. The FDIC’s proposed rules have already flagged tensions around stablecoin-as-a-service platforms and third-party yield arrangements. FinCEN is developing tailored Anti-Money Laundering (AML) rules for stablecoin issuers.

As long as the CLARITY Act remains in limbo, the jurisdictional ambiguities that have defined crypto enforcement for the past decade remain unresolved. The next administration — or even a change in agency leadership — could unwind much of what has been built through guidance and enforcement retreat.

The State Level: Don’t Count Us Out

Perhaps the most substantively interesting portion of the panel focused on state-level enforcement. As Co-Chair of North American Securities Administrators Association’s (NASAA) Enforcement Section, the state regulator on the panel has been one of the most vocal and effective voices warning that federal deregulatory momentum has the potential to create genuine investor protection gaps, and that states are both willing and legally equipped to fill them.

The NASAA 2025 Enforcement Report tells a clarifying story: in 2024, state securities regulators conducted 8,833 active investigations and initiated 1,183 enforcement actions, securing over $259 million in fines and restitution. For the third consecutive year, digital assets and cryptocurrencies ranked as the top investor threat. States opened 463 new digital asset investigations and brought enforcement actions including criminal prosecutions.

High-profile state actions in 2025 illustrated the point powerfully. For example, in March 2025, the New York Attorney General announced a $200 million settlement with a digital technology company over its promotion of the failed cryptocurrency while allegedly concealing its own plans to liquidate its holdings. Recent cases have become a flashpoint in the debate over whether state regulators can and should fill enforcement gaps left by the federal retreat.

NASAA has also made clear that the legislative fight is as important as the enforcement one. In a series of letters to Congress through 2025, NASAA warned that pending market structure legislation — if enacted with certain definitions of “investment contract” that depart from traditional Howey analysis — could hollow out state anti-fraud authority.

From the panel discussion, a few practical notes on the state enforcement picture: multi-state actions are increasingly common and efficient — states can negotiate collectively rather than separately with 50 different regulators. Parallel investigations between state and federal agencies continue regardless of federal deregulatory trends. States are also seeing investment fraud and pig-butchering cases migrate down from the federal level, and crypto firms already registered as money transmitters at the state level face their own ongoing compliance exposure. The work continues regardless of what is happening in Washington.

AML, Sanctions, and the Compliance Perimeter

The panel also addressed the AML and sanctions enforcement landscape — an area where, unlike the registration question, federal enforcement has not meaningfully retreated.

AML. The mature crypto companies represented on the panel pushed back vigorously on the public perception that crypto is opaque and hard to police for money laundering. The panelists’ view: the opposite is true. The public ledger enables tracing and fund-following at a speed and granularity unavailable in traditional finance. Illicit activity as a percentage of total transactions in crypto is lower than comparable figures for traditional finance. Mature companies are intensely focused on compliance, working proactively with law enforcement, sharing information rapidly, and helping to stop the movement of criminal proceeds faster than TradFi systems allow. The $225 million civil forfeiture complaint from June 2025 was offered as an example of this cooperative model in action — a result that required close collaboration among stablecoin issuers, exchanges, and government.

The harder question is where the compliance perimeter ends. Federal regulators expect market participants to use their resources to disrupt criminal networks — but this creates a practical dilemma for compliance officers: does transaction monitoring need to extend beyond activity on the platform itself, to conduct by customers elsewhere in the ecosystem? If it does, are firms expanding their own liability perimeter? The panel view was that firms need broader safe harbor protections to use available blockchain analytics tools and report suspicious activity without expanding the regulatory perimeter in ways that, under a different administration, could generate onerous Bank Secrecy Act violations for activity outside their control.

Sanctions. OFAC enforcement has evolved from focusing primarily on IP addresses and geofencing to scrutinizing the movement and flow of funds more broadly and the role of each participant in that flow. One panelist noted that Treasury and OFAC statements signal they want to get to the protocol level: if you are working on an exchange or facilitating the movement of funds, even without taking custody, you may have sanctions compliance obligations — and the expectation is that those obligations will be built into the code itself.

OFAC’s resourcing constraints were also highlighted: the agency is understaffed and behind in designating new targets. One proposal from the panel that merits attention: pre-designation blocking based on analytics. If enough data signals suggest that a transaction should be blocked, should an exchange implement a block even before a formal OFAC designation? The argument is that the technology makes instantaneous blocking possible in ways that traditional sanctions lists cannot achieve. The counterargument is that this expands private compliance obligations beyond the legal framework and raises due process concerns. This is likely to be an area of active policy development.

Our Take

So — sea change, or same as it ever was? What came through most clearly from this panel is that the crypto enforcement landscape in 2026 is best described as reorganized, unresolved, and more layered than ever. The federal government has deliberately stepped back from the most aggressive and contested edges of regulatory prosecution. It has formally ceded some jurisdictional ground to Congress and the regulatory agencies. But the core fraud and money laundering work continues. The actual volume of crypto-facilitated harm has not diminished. State regulators are as active and resourced as they have ever been. And new enforcement frontiers — prediction markets, AML perimeter questions, pre-designation sanctions obligations — are emerging faster than the legislative calendar can accommodate.

The industry’s celebration of the administration’s announced retreat from crypto regulatory prosecution and the GENIUS Act passage is understandable. But companies and their counsel would do well to resist reading these developments as blanket immunity or as the arrival of stable, durable regulatory clarity. Wire fraud is still wire fraud. Money laundering is still money laundering. The CLARITY Act — the legislation that would actually provide the comprehensive, binding framework everyone says they want — is still stalled in the Senate, with a narrowing window before the midterm cycle consumes the legislative calendar. The GENIUS Act’s implementing regulations are still being written. And with more than 40 states actively pursuing crypto-related legislation, the enforcement environment is not simpler — it is decidedly more complicated, and it requires practitioners to maintain a genuinely multi-jurisdictional field of vision.

For clients in the digital asset industry, the lesson is both familiar and newly urgent: the regulatory map is being redrawn, but the underlying conduct that creates liability has not changed. The network of actors ready to pursue it — at the federal and state level, through enforcement and through rulemaking — remains robust. Plan accordingly.

Live from San Diego — we’re keeping watch so you don’t have to. Stay tuned to Enforcement Edge for more coverage from the ABA White Collar Crime Institute.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.