Manhattan prosecutors signal retreat from crypto enforcement

The cryptocurrency industry sees a potential regulatory reprieve as Manhattan prosecutors indicate plans to reduce enforcement actions in the wake of President Donald Trump's electoral victory.

According to Reuters, the Manhattan U.S. Attorney's Office has signaled intentions to scale back its cryptocurrency enforcement efforts following several landmark prosecutions.

This strategic pivot comes after securing major victories, including the successful prosecution of Sam Bankman-Fried and unprecedented settlements with industry giants Binance and Terraform Labs in the aftermath of 2022's market collapse.

The development coincides with President-elect Trump's appointment of former SEC chairman Jay Clayton as the new U.S. attorney for the Southern District of New York, a jurisdiction that has historically spearheaded numerous significant digital asset cases.

Early policy adjustments under Trump's leadership hint at the regulatory shift long championed by industry stakeholders. Major players including Coinbase and Ripple xrp13.39%XRP have long pushed for enhanced regulatory clarity and comprehensive digital asset frameworks from regulatory bodies like the SEC.

Leadership changes may also be imminent at the SEC itself, with Trump suggesting new appointments while current chairman Gary Gensler has indicated possible early departure.

However, the federal cryptocurrency crackdown extends beyond SEC oversight. Industry analysts like Nic Carter have identified what appears to be coordinated governmental efforts to restrict crypto businesses' access to banking services and financial infrastructure.

Carter's analysis of "Operation Choke Point 2.0" indicates that meaningful change would require new leadership across multiple regulatory bodies, including the Treasury Department and Office of the Comptroller of the Currency.

Following recent policy discussions in Washington, Carter expressed optimism, noting growing cross-party alignment on stablecoin regulation.

Polygon's chief legal and policy officer Rebecca Rettig shares this optimistic outlook, suggesting U.S. regulatory frameworks could potentially surpass European standards. She anticipates stablecoin legislation implementation by 2025, supported by strong congressional agreement.

In terms of timing, we can expect to see stablecoin regulation in 2025. There's already substantial consensus within Congress on how to approach this, with only a few adjustments likely needed. President Trump has discussed establishing a crypto council that would bring together industry leaders, law enforcement, and policy experts to provide guidance on the best path forward for crypto regulation. From this council, we may see legislation that shapes market structure—similar to the EU's MiCA framework for centralized entities—or possibly rulemaking within regulatory agencies, or even a blend of both approaches.

Rebecca Rettig, Polygon chief legal and policy officer