General information only. CryptoRegHub provides summaries for informational purposes and does not constitute legal or compliance advice. Always verify with official sources and consult qualified legal counsel before making compliance decisions.
CryptoRegHub provides plain-English summaries of crypto regulations for informational purposes only. This does not constitute legal, compliance, or financial advice. Regulations change frequently — always verify information with official sources and consult qualified legal counsel before making any compliance decisions.
The US Treasury's Office of Foreign Assets Control (OFAC) administers and enforces economic sanctions. OFAC issued guidance specifically for the virtual currency industry in October 2021, making clear that US sanctions apply to crypto transactions in the same way as traditional financial transactions. In 2022 OFAC sanctioned Tornado Cash (a crypto mixer), the first time a software protocol was sanctioned — though the Treasury Department removed the Tornado Cash sanctions in 2025 following a court ruling that immutable smart contracts are not "property." Sanctions compliance is a strict liability matter for some violations — a company may face civil penalties even if it did not know it was dealing with a sanctioned person. The GENIUS Act reinforces OFAC obligations for stablecoin issuers, requiring technical capability to block, freeze and burn tokens on lawful sanctions orders.
Applies to all U.S. persons — U.S. citizens and lawful permanent residents wherever located, everyone within the United States, and entities organised under U.S. law including their foreign branches — and to transactions that occur in whole or in part in the United States. Certain programmes (the Cuba, Iran and North Korea programmes) also reach foreign entities owned or controlled by U.S. persons. Non-U.S. firms are reached where their activity involves the United States, U.S. persons or U.S.-origin goods or services — including U.S.-dollar settlement and U.S. counterparties — and by the prohibition on causing a U.S. person to violate sanctions; several non-U.S. exchanges have settled with OFAC on that basis. Crypto exchanges, custodians, wallet providers (including non-custodial software providers), payment processors and stablecoin issuers all carry OFAC obligations.
Key requirements: (1) Screen all customers and beneficial owners at onboarding and on an ongoing basis against the SDN List (the Specially Designated Nationals and Blocked Persons List) and OFAC's Consolidated Sanctions List, applying the 50 Percent Rule to entity ownership. (2) Screen transaction counterparties and digital-currency wallet addresses — including the addresses OFAC lists as SDN identifiers — and use blockchain analytics for exposure beyond listed addresses. (3) Prevent access from comprehensively sanctioned jurisdictions using IP geolocation and VPN detection. (4) Block property in which a blocked person has an interest, or reject transactions that cannot lawfully be processed, and report blocked property within 10 business days through the OFAC Reporting System, annually by September 30 for holdings at June 30, and rejected transactions within 10 business days (31 CFR 501.603-604). (5) Keep full records of every transaction subject to OFAC regulations for at least 10 years (31 CFR 501.601). (6) Maintain a risk-based sanctions compliance programme — management commitment, risk assessment, internal controls, testing and training — as OFAC's Framework and 2021 guidance expect; penalties and enforcement procedures are now consolidated in 31 CFR Part 505. (7) For stablecoin issuers under the GENIUS Act: maintain technical capability to freeze and burn tokens at OFAC direction.
Always refer to official sources to confirm current requirements. CryptoRegHub summaries are for general guidance only.
Personal criminal liability including imprisonment
This summary is for general informational purposes only and does not constitute legal advice. Always verify with official sources and consult qualified legal counsel.