OFAC (Office of Foreign Assets Control)

The Office of Foreign Assets Control is a financial intelligence and enforcement agency of the U.S. Department of Treasury that administers and enforces economic sanctions programs targeting countries, regimes, terrorists, narcotics traffickers, and other threats to U.S. national security and foreign policy.

OFAC maintains the Specially Designated Nationals and Blocked Persons List (SDN List) identifying individuals, entities, and assets subject to blocking and transaction prohibitions. As of 2025, the SDN List includes over 1,200 crypto wallet addresses. U.S. persons and entities must screen transactions, customers, and counterparties against OFAC lists and block assets of designated persons. Violations can result in civil penalties up to the greater of twice the transaction value or $250,000 per violation, plus criminal penalties including fines and imprisonment.

Crypto-specific enforcement: OFAC has sanctioned cryptocurrency addresses associated with ransomware groups, North Korean state-sponsored hackers (Lazarus Group), Russian darknet markets, and mixing services. Enforcement actions targeting crypto firms increased 28% from 2023 to 2024, with the average time between wallet designation and exchange enforcement action now approximately 72 hours. Crypto exchanges and wallet providers must implement real-time sanctions screening using blockchain analytics tools to identify and block transactions involving sanctioned addresses.

GENIUS Act integration: The GENIUS Act (July 2025) explicitly codified OFAC compliance requirements for permitted payment stablecoin issuers (PPSIs), requiring effective sanctions compliance programs with procedures to screen and block transactions involving sanctioned persons. The Act establishes coordination protocols between Treasury and stablecoin issuers when designating parties to the SDN List.

Watch: Tornado Cash precedent. In November 2024, the Fifth Circuit ruled that OFAC exceeded its statutory authority by sanctioning Tornado Cash's immutable smart contracts, holding they are not "property" under IEEPA. A parallel case in the Eleventh Circuit could create a circuit split leading to Supreme Court review. This ruling creates uncertainty around OFAC's authority over decentralized protocols and immutable code.

Compliance considerations: Sanctions apply extraterritorially to any transaction touching U.S. financial systems or involving U.S. persons regardless of geographic location. OFAC compliance creates particular challenges in crypto since blockchain addresses are permissionless and transactions can route through multiple wallets, requiring continuous monitoring of transaction chains and counterparty wallet histories. Blocked virtual currency must be reported to OFAC within 10 business days.