U.S. Cryptocurrency Regulation Faces New Turmoil: Senator Questions DOJ Official's Cryptocurrency Holdings and Enforcement, Possible Conflict of Interest

January 29 News, a controversy has reignited within the U.S. Congress regarding cryptocurrency regulation. Six senators recently co-signed a letter to Deputy Attorney General Todd W. Blanche, questioning potential undisclosed financial conflicts of interest as he seeks to reduce enforcement efforts against digital assets in the United States.

The signatory senators include Elizabeth Warren, Mazie K. Hirono, Richard J. Durbin, Sheldon Whitehouse, Christopher A. Coons, and Richard Blumenthal. The letter states that when Blanche issued a memorandum titled “Ending Enforcement Through Prosecution” in April 2025, he still held approximately $158,000 to $470,000 worth of cryptocurrencies, mainly Bitcoin and Ethereum. The memorandum instructed prosecutors to avoid actions targeting platforms themselves and to focus enforcement on individuals using cryptocurrencies for criminal activities.

The senators believe that participating in such policy decisions while holding relevant assets “at least constitutes a clear conflict of interest” and may violate Section 208(a) of Title 18 of the U.S. Code. The letter also includes a timeline indicating that Blanche only sold or transferred some assets between May and June 2025, months after his commitment to divest and the issuance of the memorandum.

The senators warn that easing enforcement after tightening could encourage evasion of sanctions, scams, drug trafficking, and other illegal activities, noting signs of increased crime related to Chinese money laundering networks. Although the Department of Justice responded that the matter has been “appropriately addressed” and denied any misconduct, the senators still demand disclosure of the internal review process, ethical compliance records, and whether a written waiver was obtained.

Additionally, oversight organization Campaign Legal Center has filed a complaint with the Department of Justice Inspector General, requesting an independent investigation. At the same time, the U.S. political sphere has previously expressed concerns about potential conflicts of interest involving Donald Trump and his family’s involvement in digital asset projects. The senators have called for Blanche and the Department of Justice to provide a formal response by February 11, 2026, with subsequent developments potentially influencing the direction of cryptocurrency regulation in the United States.