Blanche Confirmed, Crypto Enforcement Dead, and Bitcoin Still Down 25% - What Actually Matters

The Senate confirmed Todd Blanche as U.S. attorney general by the thinnest of margins - 50 to 49, with only two Republican senators breaking ranks against him. The crypto industry celebrated. The headlines read like a victory lap.

The data tells a different story. Because if you think a pro-crypto attorney general is going to move the needle on Bitcoin while the liquidity cycle is still in the doldrums, you're paying attention to the wrong variable.

The Man Who Dismantled Crypto Enforcement While Holding Crypto

Here's what most headlines are leaving out. Blanche didn't just arrive in office with friendly sentiments toward digital assets. He reshaped the Department of Justice's entire approach to crypto enforcement - while he was still personally invested in the industry.

Before his confirmation as deputy attorney general in March 2025, Blanche disclosed cryptocurrency holdings between $159,000 and $485,000. His ethics agreement required him to divest within 90 days and to recuse himself from any matter that could "direct and predictably" affect his financial interests in virtual currency.

About a month into the job, before selling a single token, he issued the April 7, 2025 memo that ended "regulation by prosecution" in the digital asset space. The memo ordered federal prosecutors to stop pursuing regulatory violations - unlicensed money transmission, Bank Secrecy Act breaches, unregistered securities and broker-dealer charges - in crypto cases. It disbanded the National Cryptocurrency Enforcement Team, a task force built during the Biden administration specifically to target exchanges, mixers, and platforms facilitating crypto crime. The Market Integrity and Major Frauds Unit was told to cease cryptocurrency enforcement entirely.

Legal experts told ProPublica this violated both federal conflict-of-interest law and his own ethics agreement. He eventually transferred his holdings to his children and a grandchild - technically legal, though it defeats the spirit of the recusal requirement.

The Campaign Legal Center filed a formal complaint with the DOJ Inspector General. Democratic senators - Hirono, Warren, Durbin - wrote demanding he explain himself. At minimum, they said, he had a "glaring conflict of interest" and should have recused himself.

This isn't just a governance concern for the DOJ. It matters because the person who unilaterally decided the U.S. government would stop prosecuting crypto regulatory violations was still sitting on a six-figure position in the very industry he was deregulating.

What Happened After the Enforcement Lights Went Out

The Blanche memo was framed as a shift toward focusing on "actual criminals" - people who defraud investors or use crypto for terrorism, human trafficking, and cartel financing. Fraudsters, not innovators. That's a compelling sound bite.

But the on-chain data that followed is not comforting.

According to Chainalysis and TRM Labs, illicit cryptocurrency activity reached a record high in 2025 - $154 billion to $158 billion in total volume received by illicit addresses, depending on the methodology. That is up 145% to 162% year-over-year from 2024. The primary driver was a 694% surge in value received by sanctioned entities, led by Russian sanctions evasion networks using the ruble-backed stablecoin A7A5, which processed over $72 billion to $93 billion in transactions in less than a year.

The senators who raised alarms wrote: "our predictions have proven correct, with illicit cryptocurrency activity soaring 162% in 2025." Chinese money-laundering networks emerged as a "dominant force" in the digital asset ecosystem, processing over $100 billion.

Now, it's worth noting that illicit volume as a share of total crypto activity actually fell slightly - from 1.3% in 2024 to 1.2% in 2025. The overall market grew faster than the crime. But the absolute scale of illicit flows - $158 billion at its peak - is the kind of number that should make anyone thinking about crypto as a mainstream asset class pause.

The Price Doesn't Care About the Attorney General

And here is the thing that really matters. Bitcoin is trading at $64,980 as of this morning. That is down 24.7% over the past 250 days and down 6.6% year-to-date. Ethereum is at $1,919, down 31.5% over 250 days and 11.2% year-to-date. The crypto fear and greed index sits at 30 - solidly in fear territory.

The total crypto market cap is $2.21 trillion. That's not nothing, but it's nowhere near where it was heading when everyone assumed a pro-crypto administration would trigger a permanent bull market.

I've been saying for years: crypto is macro and macro is crypto. Bitcoin implied ISM tracks the actual ISM. Ethereum charts against Fed Net Liquidity show a long-term correlation that holds up over cycles. What moves these assets is not the political affiliations of cabinet officials. It's the global liquidity cycle - central bank balance sheets, money supply, credit creation.

When liquidity expands, risk assets rise. When it contracts, they fall. That's the framework. The Blanche confirmation is noise around that trend.

The Real Story: The Clarity Act Is Dying

While the crypto industry was cheering Blanche's confirmation, the Senate killed the clock on something that would actually matter. The Clarity Act - the most significant crypto market-structure bill in a decade - will not get a vote before the August recess. With midterm elections looming in November, the odds of passage before year-end are fading fast.

No legislative clarity on what constitutes a security versus a commodity, no framework for stablecoin regulation, no certainty for market participants. The DOJ can stop prosecuting regulatory violations, but if the underlying laws don't change, companies are still operating in the dark. Every one of those statutes - the Securities Act of 1933, the Bank Secrecy Act, the Commodity Exchange Act - is still firmly in place.

The Blanche memo itself warns that its guidance "does not, and may not be relied upon to create any right or benefit, substantive or procedural, enforceable at law." Which is government-speak for: this could all reverse the moment the next administration takes office.

What to Watch

The Blanche confirmation is a political headline, not a macro signal. If you're trying to understand where crypto is heading, here's what actually moves the needle:

• Fed balance sheet and M2 data: These are the leading indicators. If they inflect higher, crypto follows - regardless of who sits in the DOJ.
• The next ISM print: Bitcoin implied ISM has tracked the actual ISM with remarkable consistency for years. A reading that confirms recovery will matter more than any attorney general.
• Clarity Act legislative progress: If it survives the recess, it's the closest thing to genuine structural clarity the industry will see. If it dies, the regulatory overhang remains.
• Illicit flow data: If the DOJ enforcement vacuum continues, the 162% surge in illicit crypto volume could become a political liability for the very administration that dismantled the enforcement apparatus.

The crypto industry has spent a lot of capital and political capital lobbying for deregulation. Blanche delivered - while holding a personal position in the assets he was deregulating. The question now is whether the absence of enforcement creates enough illicit activity to trigger a political backlash that reverses the entire policy.

Good luck out there.