Davis Polk: Dan Stipano discusses DOJ crypto enforcement with MoneyLaundering.com
Davis Polk AML/BSA head Dan Stipano was quoted in MoneyLaundering.com discussing a Department of Justice memo that marks a “very significant” change in posture by the government toward cryptocurrency exchanges.
Speaking about how the oversight of crypto will change following the memo, Dan said, “It’s a clear signal from the administration that, at least in terms of crypto enforcement policy, the targets of enforcement actions are not going to be crypto exchanges or crypto platforms, but rather the bad actors that transact through those exchanges around those platforms.”
When asked what will happen to cases that the disbanded National Cryptocurrency Enforcement Team (NCET) was pursuing, Dan noted, “They’ll review the cases that are out there and make some decisions as to whether they want to continue to pursue them or not. But in this environment, it seems like there’s at least a decent chance that they will not pursue those cases.”
Discussing the regulation and enforcement of crypto from all agencies, he pointed out, “Regulation of crypto in general has been very spotty. It falls among several agencies and there’s no one agency that’s really tasked with it. It’s clear that under current leadership, the SEC is not going to be an aggressive regulator of crypto. FinCEN is woefully understaffed. The CFTC has a role to play, but again, I think the same policy is going to apply. The question I have is, what happens to the gatekeepers, the companies that actually provide access to the blockchain? It’s clear that the whole crypto area continues to be attractive to criminals and criminal organizations, so it’s very important from a policy standpoint that you have effective oversight.”
Even with the change in policy, Dan believes that digital asset platforms will likely not reduce or eliminate their BSA efforts. “The responsible players in the crypto industry are not going to dismantle their AML programs,” he said. “They’ve invested a lot of time and money into those programs and they’re smart enough to realize that things change. We could have a Democratic-controlled Congress in two years. We could have a Democratic-controlled White House in four years. We could have another FTX at any time. Any of those things could change the environment very quickly.”
Pointing out the uncertainty around who will pursue money laundering charges involving crypto, Dan said, “I’m not really sure what’s going to happen because DOJ disbanded their crypto task force. You still have MLARS [Money Laundering and Asset Recovery Section], at least for the time being. Will MLARS pursue these cases or will MLARS itself go away and get folded into another part of DOJ? It’s just an awful lot of uncertainty right now.”
“DOJ Memo ‘Very Significant,’ But AFC Professionals Differ Over Its Impact,” MoneyLaundering.com (April 21, 2025) (subscription required)
