Washington D.C. – Commodity Futures Trading Commission (CFTC) Acting Chairman Caroline D. Pham has issued a directive to overhaul the agency’s enforcement approach, effectively ending what she terms “regulation by prosecution” within the digital asset industry. The move, announced April 8, 2025, aligns the CFTC with a recently unveiled Justice Department policy focused on accountability for malicious actors rather than pursuing minor regulatory violations.
Pham criticized years of aggressive enforcement actions against digital asset innovators, stating they created uncertainty and hindered American competitiveness. Her directive instructs CFTC staff and the Director of Enforcement to comply with President Biden’s Executive Order 14219 and prioritize cases involving genuine fraud and manipulation.
The core of the new policy centers on a stricter standard for pursuing violations of registration requirements under the Commodity Exchange Act. The CFTC will now only pursue such cases if there is evidence the defendant *knowingly* violated the requirements. This mirrors the Justice Department’s guidance, outlined in Deputy Attorney General’s memorandum “Ending Regulation by Prosecution,” dated April 7, 2025.
While Pham’s authority as Acting Chairman allows her to issue this directive, a significant hurdle remains. The CFTC currently lacks a majority commission, meaning the agency cannot dismiss ongoing cases or enter into settlement consent orders without a majority vote. Despite this, Pham has instructed staff to “de-prioritize actions” related to registration violations to conserve resources.
The directive is a clear signal that the CFTC, under Pham’s leadership, intends to shift its focus from aggressively policing the boundaries of digital asset regulation to prosecuting demonstrably fraudulent and manipulative behavior. This change aims to foster responsible innovation and rebuild trust in the regulatory process, according to Pham.
Source: CFTC.gov
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