Bitcoin-Holding Acting AG Todd Blanche Sends Conflicting Signals to Crypto

Todd Blanche’s sudden move into the top chair at the Department of Justice puts crypto policy back under a microscope—for good reason. As deputy attorney general, he curbed the DOJ’s crypto posture: he shut down its dedicated digital asset enforcement unit and told prosecutors to ease off exchanges and mixing services, even those linked to criminal networks and adversarial regimes like North Korea and Iran. Yet under the same leadership, prosecutors continued to convict and imprison open-source privacy developers. That tension—not the politics—will shape how builders and capital recalibrate.

Here’s the split-screen. Blanche, a former federal prosecutor and once Donald Trump’s personal attorney, was elevated after the president fired Attorney General Pam Bondi. Trump indicated the promotion could be temporary while he evaluates Blanche’s performance. On paper, Blanche looks industry-friendly. Upon entering government last year, he disclosed personal crypto exposure: $100,000 to $250,000 in Bitcoin and $50,000 to $100,000 in Ethereum, plus smaller allocations to Solana, Cardano, Ethereum Classic, Polygon, and Polkadot—custodied at Coinbase. He later reported transferring those assets to his adult children and a grandchild for ethics compliance.

Within weeks of becoming the DOJ’s No. 2, Blanche dismantled the crypto-focused enforcement team and criticized “regulation by prosecution.” A senior DOJ official then told policy stakeholders the administration would halt charging software developers with unlicensed money transmission solely for publishing code. If that had held, it would have been a meaningful reset for open-source contributors working on wallets, mixers, and other privacy tools.

But the case docket told a different story. Last fall, two developers behind Bitcoin privacy software received prison sentences for operating an illegal money transmitter. In a separate matter, an Ethereum developer, Roman Storm, was convicted by a Manhattan jury of unlicensed money transmission related to creating similar software, though the jury deadlocked on two additional counts. As recently as last month, with Bondi and Blanche overseeing the department, prosecutors moved to retry Storm on the unresolved charges. Industry advocates argue this inconsistency leaves developers guessing where the line sits—and guessing is exactly what chills innovation.

This is less about rhetoric and more about enforcement architecture. Main Justice can signal a new stance, but U.S. Attorney’s Offices have autonomy and incentives to pursue cases that fit their interpretations of money transmitter statutes and the Bank Secrecy Act. Without binding guidance, safe harbors, or rulemaking, a memo is a yellow light, not a green one. Teams default to precedent, especially where they believe mixers facilitate sanctions evasion or money laundering, which makes exchanges and privacy tooling persistent targets regardless of a top-line pivot.

The personal-ownership angle matters for optics but not outcomes. Blanche’s prior holdings—moved to family accounts—won’t erase skepticism about conflicts, yet ethics paperwork rarely dictates charging decisions. What does move behavior is certainty. Builders need to know whether shipping non-custodial, open-source code exposes them to “money transmission” liability. Exchanges need clarity on how far they can go on mixers, cross-chain bridges, and privacy features without triggering enforcement—even when hostile states exploit the same tools.

One more variable lingers: clemency. In December, the president said he would “look at” pardons for developers convicted by his DOJ. None have materialized. If pardons arrived now, they would relieve individuals but not correct the structural ambiguity that produced the cases in the first place.

What to watch with Blanche at the helm: - Whether the DOJ formalizes its stance on unlicensed money transmission for non-custodial software via policy memos with teeth—or coordinates with Treasury for rulemaking that carves out developer activity distinct from custodial services. - If prosecutors pause new cases against privacy tool creators while existing matters proceed, signaling a transitional doctrine. - Any recalibration of priorities toward custodial intermediaries with actual control of funds versus publishers of code.

If Blanche wants credibility with both markets and law enforcement, he needs to align words with charging decisions. Until then, developers will keep pricing in legal risk—and the smartest ones will design as if prosecutions, not promises, define the real policy.