In a move to align more closely with U.S. regulatory requirements, Tether has introduced a policy to freeze wallets associated with individuals on the OFAC-sanctioned list, as part of their expanding efforts to enforce control sanctions in the secondary market.
The stablecoin issuer detailed its latest measure in a blog post dated Dec. 9, aiming to enhance collaboration with law enforcement and regulatory bodies. Starting from Dec. 1, Tether has initiated controls on the secondary market to restrict transactions linked to individuals and entities listed on the United States Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) List, which includes those controlled or owned by sanctioned countries.
Tether’s new strategy aims to reinforce existing security measures and is described as a “proactive effort to work even more closely with global regulators and law enforcement agencies.”
The U.S. Department of the Treasury leverages the SDN List to prevent cryptocurrency transactions that may be related to illicit activities, such as financing terrorism or illegal distribution of substances like fentanyl.
In a notable shift from its previous stance, Tether has already frozen wallets that were added to the SDN List in the past. For instance, in August 2022, Tether stated it wouldn’t voluntarily freeze wallets associated with Tornado Cash without direct instructions from law enforcement agencies. Tornado Cash has been implicated by the OFAC in laundering over $7 billion in cryptocurrency since 2019.
Paolo Ardoino, CEO of Tether, commented on the policy, stating, “By executing voluntary wallet address freezing of new additions to the SDN List and freezing previously added addresses, we will be able to further strengthen the positive usage of stablecoin technology and promote a safer stablecoin ecosystem for all users.”
Based in Hong Kong, Tether oversees the stablecoin Tether USDT, which has seen its market capitalization soar to record levels amidst increased scrutiny of crypto firms in the U.S. Currently, the market capitalization of Tether stands at $90 billion, capturing nearly 70% of the stablecoin market share.