What are OFAC crypto sanctions and how do they work?

OFAC crypto sanctions are the US Treasury's sanctions rules as they apply to digital assets. The Office of Foreign Assets Control bars US persons from dealing with sanctioned people, companies and countries, and it says those duties are the same whether a payment uses crypto or regular money. The wider anti-money laundering picture is covered in crypto anti-money laundering rules.

What are OFAC sanctioned crypto addresses?

When OFAC designates a person or business, it can add their known crypto addresses to the Specially Designated Nationals (SDN) List. According to OFAC's FAQs, each address gets its own entry, labeled "Digital Currency Address" with the coin's symbol, such as XBT or ETH. OFAC also warns these address listings are not likely to be exhaustive. Anyone a listed party owns 50% or more of is blocked too, even without its own entry.

Designations keep coming. On August 7, 2026, Treasury sanctioned two crypto exchanges, Shelbit and Aban Tether, saying Iranian actors used them to launder funds and benefit Iran's Revolutionary Guard. Listings can also be removed, as happened with the mixer Tornado Cash in March 2025, explained in what is a crypto mixer. How to look up an address is covered in how to check if a crypto address is valid.

What does OFAC crypto guidance require?

OFAC's 2021 Sanctions Compliance Guidance for the Virtual Currency Industry applies to US citizens and permanent residents wherever they are, anyone in the US, and US companies. It recommends a risk-based compliance program. For crypto firms, crypto sanctions screening typically includes:

• checking customers against the SDN List at sign-up and again as the list changes
• screening transactions and wallet addresses against listed addresses
• blocking IP addresses from sanctioned regions and watching for VPN use
• using blockchain analytics to trace links to listed addresses

The Kraken case shows why OFAC stresses location checks. In November 2022, Kraken paid about $362,000 to settle 826 apparent violations. OFAC said Kraken checked IP data when accounts were opened but not on later transactions, so some users traded from Iran.

What happens if you send crypto to a sanctioned address?

For a US person, dealing with a blocked party is generally prohibited, and OFAC says civil penalties can apply on a strict liability basis, meaning even without knowledge. OFAC weighs the full circumstances, and a solid compliance program and prompt fixes count in a firm's favor.

On the receiving side, a US exchange or custodian that identifies crypto tied to a blocked person must freeze it, deny everyone access and report it to OFAC within 10 business days, then annually while it stays blocked. That is one way funds end up frozen, as can crypto be frozen explains. Owners can ask OFAC for release through its license application process.

Rules differ by country and change often. Check the regulator or a qualified professional for your own situation.