This week, in the U.S. Capitol, a letter of inquiry co-signed by six senators pointed directly at Deputy Attorney General Todd Blanche. The controversy surrounding the dissolution of the National Cryptocurrency Enforcement Team (NCET) quickly escalated into a political storm regarding whether high-ranking officials holding substantial cryptocurrency assets are qualified to determine the direction of cryptocurrency enforcement. As the letter explicitly questioned Blanche's ethical boundaries between personal assets and public decision-making, and confirmed that the matter has been submitted to the Department of Justice's Office of the Inspector General for investigation, the next chapter of U.S. cryptocurrency regulation is clearly framed as a direct clash between regulatory power and personal financial ethics.
Dissolution of the Cryptocurrency Enforcement Team: A Single Order Disrupts the Entire Regulatory Chain
● Background and Symbolic Significance of NCET's Establishment: The National Cryptocurrency Enforcement Team (NCET) was established in 2021 with the task of specifically investigating crimes related to cryptocurrency assets, covering cross-border crime scenarios such as sanctions evasion, money laundering, and ransomware. For the Department of Justice, NCET represented an attempt to specialize in on-chain data analysis and inter-agency intelligence collaboration, and it was seen as a landmark initiative in the U.S. federal response to the expansion of cryptocurrency crime, signaling a "zero tolerance" stance against illegal activities in the crypto space.
● Blanche's Push to Dissolve NCET and the Accusations: Against this backdrop, Deputy Attorney General Todd Blanche's push to dissolve NCET was viewed by senators as a "reverse reconstruction" of the cryptocurrency enforcement landscape. The co-signed letter accused that this decision was not merely an organizational optimization but directly weakened the federal government's specialized capabilities in addressing on-chain money laundering and sanctions evasion, causing previously concentrated professional resources in NCET to be dispersed, thereby objectively raising the enforcement threshold for investigating complex cross-chain and cross-border crimes.
● Political Characterization of "Opening the Floodgates for Illegal Finance": The six senators used strong language in the co-signed letter, stating that the dissolution of NCET "may open the floodgates for sanctions evasion and illegal financial activities." This statement equated the organizational adjustment directly with a "loosening" of crime control, not only questioning the decision-making judgment but also politically labeling Blanche as "weakening the national security defense line." The divergence over whether to "loosen" cryptocurrency enforcement quickly evolved into a public tug-of-war between Congress and the Department of Justice.
● Escalation to Formal Accountability Procedures: More critically, the senators did not stop at public pressure but formally submitted the matter to the Department of Justice's Office of the Inspector General, demanding an investigation into the decision-making process behind the dissolution of NCET and potential conflicts of interest. This means that procedurally, the controversy has escalated from a policy dispute to an internal investigation with accountability tendencies, becoming a systematic examination of whether the Department of Justice's senior officials have upheld ethical boundaries.
Officials Holding Over $150,000 in Cryptocurrency Under Scrutiny: From Disclosed Data to "Fox Guarding the Henhouse"
● Range of Cryptocurrency Holdings and Information Sources: According to currently available public information, a single publicly disclosed document cited by the senators shows that Blanche personally holds between approximately $158,000 and $470,000 in cryptocurrency assets. This method of disclosing asset scale in ranges aligns with the practices of financial disclosure systems for some U.S. officials: it does not need to be precise to every dollar but is sufficient to indicate that his personal exposure in cryptocurrency assets far exceeds that of ordinary investors, creating a natural magnifying glass for interpreting his motives in related policies and enforcement.
● Binding Personal Holdings to Enforcement Decisions: The logical chain of the six senators is very clear: on one hand, Blanche is a key decision-maker pushing for the dissolution of NCET and adjusting the cryptocurrency enforcement layout; on the other hand, he personally has a significant financial interest in cryptocurrency assets. The combination of these two factors is shaped by the co-signed letter as a typical potential conflict of interest scenario—when someone who directly benefits or suffers from price fluctuations and regulatory environments leads the intensity and direction of related enforcement, how can the public trust that his decisions are entirely based on public interest rather than asset performance?
● Intuitive Distrust of "Fox Guarding the Henhouse": An anonymous cryptocurrency compliance expert described in a media interview, "Having officials who hold Bitcoin weaken cryptocurrency enforcement is like letting a fox guard the henhouse." This emotionally charged metaphor has circulated widely in the market, reflecting the industry's instinctive discomfort with regulators holding assets: in a highly volatile and profit-concentrated cryptocurrency market, allowing "deep participants" to simultaneously play the role of referee seems inherently structurally unfair and opaque.
● Time Pressure from the Deadline for Ethical Review: The co-signed letter not only raised principled questions but also provided a "countdown" on the procedural level. The senators demanded that Blanche submit a complete ethical review document by February 11, 2026, detailing his personal cryptocurrency asset holdings and compliance assessments related to decision-making. This specific timeline transforms the abstract ethical controversy into a rigid compliance obligation, also marking the beginning of a long-term political agenda that can be continuously tracked and amplified.
Legal Red Lines and the Revolving Door: Ethical Dilemmas Under 18 U.S.C. § 208
● Core Constraints of 18 U.S.C. § 208(a): U.S. federal law 18 U.S.C. § 208(a) clearly states that federal officials may not participate in government matters that have a "substantial relationship" with their personal financial interests, intended to prevent public office actions from being distorted by private interests. The key here is the standard of "substantial relationship": once it can be proven that a decision is closely linked to the value of an official's personal assets, it may trigger legal liability, not just moral criticism.
● High Volatility Assets Amplifying Controversy: In the context of highly volatile and widely permeated cryptocurrency assets, this clause takes on more complex meanings. Compared to traditional stocks or bonds, cryptocurrency prices are more susceptible to dramatic fluctuations due to regulatory signals; a public statement from an official or an adjustment in enforcement structure may be seen by the market as a price catalyst. In this scenario, as long as an official holds a certain scale of cryptocurrency assets, almost any public action related to cryptocurrency may be scrutinized under the "whether it constitutes a substantial relationship" magnifying glass.
● "Revolving Door" and Neutrality Anxiety: The phenomenon of the "revolving door" between the cryptocurrency industry and regulatory agencies further exacerbates these concerns—some officials move between regulatory positions and industry institutions, even adjusting their personal asset allocations before and after career transitions. Even if they formally comply with disclosure and recusal rules, the public finds it hard to fully trust that every decision made during their tenure is free from potential career and financial considerations. The inherent high-return imagination of cryptocurrency assets makes such skepticism more politically potent.
● Sample Effect and Chilling Effect: Against this backdrop, the senators' high-profile pressure may not only target Blanche personally but also aim to establish a "benchmark case" for the ethical boundaries of cryptocurrency regulation. Once the Inspector General's investigation and subsequent procedures yield clear conclusions, the behavioral boundaries for future federal officials holding cryptocurrency assets and participating in related policy-making will be significantly tightened, creating a strong chilling effect—"If you want to regulate cryptocurrency, it's best to touch it less," may become a new political unwritten rule.
U.S. Cryptocurrency Enforcement Restructuring: Genuine Optimization or Soft Landing?
● Directional Uncertainty of Resource Integration: Without fabricating details, currently available public information has not disclosed how enforcement resources will be redistributed after the dissolution of NCET. It is reasonable to discuss that the functions of cryptocurrency enforcement are unlikely to be completely "drained," but may be integrated into existing criminal departments, national security, or financial crime-related units. This restructuring may enhance inter-departmental collaboration efficiency but could also pose operational risks in the short term, such as the fragmentation of professional teams and disruption of experience transfer.
● Efficiency Comparison Between Specialized Teams and Traditional Models: The advantage of the specialized team model like NCET lies in its focus on on-chain analysis, exchange collaboration, and vertical integration of cross-border intelligence, enabling a comprehensive response to complex cases like cross-chain money laundering and ransomware. However, if functions are dispersed back to traditional departments, while organizationally closer to the Department of Justice's normal mode, it may lead to a fragmented risk of "everyone managing a bit, but no one truly leading" when facing rapidly evolving and technically challenging on-chain crimes, resulting in both enforcement response speed and case depth being compromised.
● Political Calculations Behind "Weakening Enforcement": In the eyes of the senators, dissolving NCET is a typical signal of "weakening enforcement," but within Washington, some factions may actually hope to lower hostility towards the cryptocurrency industry to leave more flexible space for future regulatory frameworks. In this narrative, weakening a symbolically strong enforcement agency is packaged as part of promoting an "innovation-friendly" environment, but when the decision-maker themselves holds considerable cryptocurrency assets, this "soft landing" is easily interpreted as self-serving rather than reformative.
● Technology-Driven New Normal of Compliance: Regardless of how the structure adjusts, the technological foundation trend for cryptocurrency compliance and sanctions enforcement has been established: relying more on on-chain tracking tools, transaction pattern recognition, and inter-agency intelligence collaboration, rather than just traditional bank reports and manual checks. In other words, even if NCET no longer exists as an independent brand, the actual execution of cryptocurrency enforcement will increasingly become technical and data-driven; however, whether this process will be slowed down due to organizational turmoil remains a significant hidden variable in the current controversy.
Price Hovering Around $83,400: Market's Calm Valuation Amid Regulatory Storm
● Background of Fluctuations Around $83,400: According to on-chain data service provider glassnode, Bitcoin has recently fluctuated around the key support level of approximately $83,400, and while regulatory and political noise continues to rise, mainstream market trends have not shown a unilateral crash or surge. This high-level consolidation provides a relatively calm price backdrop for interpreting this round of regulatory storm—markets are concerned but have not yet been completely swept up by emotions.
● Wait-and-See Sentiment in Range Fluctuations: This range fluctuation reflects a macro capital wait-and-see attitude towards the direction of U.S. regulation and long-term compliance prospects. On one hand, institutional investors worry that if the attack on officials holding cryptocurrency evolves into a broader anti-crypto political movement, future compliance costs and policy uncertainties will significantly increase; on the other hand, some funds bet that such conflicts will ultimately force the introduction of institutionalized rules, clearing obstacles for large-scale compliance entry.
● Dual Signals of "Officials Holding Cryptocurrency + Dissolution of Enforcement Team": From a trader's perspective, "high-ranking officials holding cryptocurrency assets" and "dissolving specialized enforcement teams" form a complex combination signal: it may imply a short-term regulatory vacuum and marginal relaxation of enforcement, thus creating a bullish expectation for prices; it may also be seen as a prelude to damaged institutional credibility, triggering concerns about future stricter reactive regulation. The coexistence of these two completely opposite narratives makes the market more inclined to hedge narrative uncertainties by reducing positions and lowering leverage.
● Emotion and Expectation Driving Volatility: From the current on-chain and price performance, such political and regulatory news primarily influences short-term volatility through emotion and expectation, rather than immediately changing fundamental indicators like hash rate and asset concentration. In other words, the more intense the narrative, the more likely it is to amplify short-term volatility in the derivatives market, but the underlying network and long-term demand curve will not change overnight, which is also one of the key reasons why prices can maintain fluctuations at high levels rather than collapse.
Looking at the Next Chapter of Cryptocurrency Regulation from This Hearing Storm
Ultimately, the storm surrounding Blanche is a collective inquiry about "who regulates the regulators": when officials holding substantial cryptocurrency assets lead the dissolution of the cryptocurrency enforcement team, personal holdings, ethical red lines, and the boundaries of cryptocurrency regulatory power are thrust into the spotlight. The legal debate surrounding the "substantial relationship" standard of 18 U.S.C. § 208 is precisely the U.S. attempt to fill the ethical and compliance institutional puzzle for this new asset class.
Looking ahead, from a procedural perspective, the investigation results from the Department of Justice's Office of the Inspector General and the ethical review materials submitted by Blanche before February 11, 2026, will become a critical watershed: at best, it will lead to accountability and correction for individuals; at worst, it may trigger systemic regulations on federal officials holding cryptocurrency assets, potentially promoting stricter asset disclosure, mandatory recusal, and even holding bans.
Regardless of the final outcome, this incident is likely to accelerate the clarification of institutional norms in the U.S. regarding officials' cryptocurrency holdings, conflict of interest identification, and avoidance mechanisms, providing a reference model for other jurisdictions. For investors, incorporating such political and regulatory games into the medium- to long-term risk pricing framework and tracking subsequent congressional hearings, enforcement structure reorganizations, and related legislative proposals has become an indispensable part of understanding the risk-return structure of cryptocurrency assets.
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