OFAC Bitcoin Sanctions: What US Persons Cannot Do

Sanctions law applies to Bitcoin just as it applies to dollars.

If you are a US person, you may not deal in property belonging to a sanctioned ("blocked") person. That includes Bitcoin. When the Office of Foreign Assets Control (OFAC) lists a crypto address on its Specially Designated Nationals (SDN) List, coins held there are treated as that person's property.

OFAC has explained this in its FAQs for years. It adds specific crypto addresses to SDN entries as "identifiers." But the list is not exhaustive. A wallet that isn't listed can still belong to a sanctioned person.

Sanctions are also a separate topic from the Strategic Bitcoin Reserve and from civil forfeiture. Those deal with coins the government already holds, or is trying to take in court. OFAC decides who you are not allowed to deal with in the first place.

This article is general legal information. It is not legal advice.

The legal powers behind sanctions are not new. The International Emergency Economic Powers Act (IEEPA) and a series of executive orders allow the Treasury to freeze property and prohibit transactions. Examples include Executive Order 13224 for terrorism and Executive Order 13902 for Iran, along with others covering cyber activity and weapons proliferation.

None of these stopped applying because Bitcoin came along.

A "US person" includes:

Sending a transaction from a phone abroad doesn't change your status if you are a US citizen. And arguing that "an address is just math" is not a legal defense.

OFAC's guidance is direct. If you hold digital currency that you know or have reason to believe belongs to a sanctioned person, you must block it (meaning freeze it and not move it) and report it to OFAC within 10 business days.

OFAC civil penalties are also "strict liability." You can be penalized even if you didn't know the other party was sanctioned, although your knowledge and your compliance efforts affect the size of the penalty.

Exchanges screen transactions because they are US persons themselves, or because they connect to the US financial system.

When an exchange freezes a deposit linked to a sanctioned address, it is meeting its own legal obligations. That doesn't mean your hardware wallet is illegal, and it doesn't mean you've been found guilty of anything.

OFAC has been adding crypto addresses to the SDN List in larger batches, and 2026 brought three notable actions.

1 July 2026: ISIS-K wallets. OFAC updated its designation of ISIS-Khorasan, adding 134 crypto addresses as identifiers. None were Bitcoin addresses: 131 were on the TRON network and 3 on Monero. The point for Bitcoin holders is the method. OFAC increasingly names the actual wallets behind a sanctioned group.

24 August 2026: Iran's digital asset sector. As part of a campaign Treasury calls "Operation Economic Outcast," OFAC issued a determination under Executive Order 13902 covering five sectors of Iran's economy: aviation, digital assets, gold, shipping, and technology.

This means OFAC can now sanction any person it determines operates in Iran's digital asset sector, even without a separate link to terrorism, oil, or weapons programs. It can also target people who materially assist them or conduct significant transactions with them.

17 September 2026: BitBank. Under that new authority, OFAC designated BitBank, which it describes as a digital asset venture controlled by Iranian financier Babak Zanjani, along with its software developer and three associates. According to Treasury, BitBank was used between June and July 2026 to transfer hundreds of millions of dollars' worth of Bitcoin to Iran's Revolutionary Guard (IRGC).

The legal takeaway is simple. Once a person, entity, or address is on the list, US persons must stop dealing with it.

Iran-related exposure is now broader than a list of names. If a counterparty is a platform serving users in Iran, you may have a sanctions problem well before any Travel Rule question arises.

OFAC sanctioned Tornado Cash, an Ethereum mixing protocol, in 2022.

In November 2024, the Fifth Circuit ruled in Van Loon v. Department of the Treasury that Tornado Cash's immutable smart contracts were not "property" that OFAC could block under IEEPA. The Treasury removed Tornado Cash from the SDN List on 21 March 2025.

Criminal cases against individual developers are a separate matter, handled in separate courts.

This history does not make it safe to use any tool that hides who you are paying. If the person on the other side is sanctioned, using a mixer doesn't remove the prohibition. And if you build or operate a service that moves money for the public, you face both FinCEN money transmitter rules and sanctions screening requirements.

Holding your own keys means no compliance team reviews your transactions. It also means every transaction is entirely your responsibility.

A US person who pays a sanctioned address from a hardware wallet has the same legal problem as one who does it through an exchange. The only difference is that no one is there to catch it first.

Screening is harder when you do it yourself. That makes compliance more difficult in practice, but it doesn't create a legal exemption. Wallets and block explorers that flag OFAC-listed addresses are a useful first check. They are not a legal opinion, and they can't flag wallets OFAC has never published.

If coins from a sanctioned source land in a wallet you control, the rule is to block them and report them. Trying to move or mix them away creates a much bigger problem.

Tax. A prohibited transfer can still count as a taxable disposal for the IRS. Sanctions compliance and tax compliance are two separate obligations.

Forfeiture. A sanctions violation can lead to a criminal case, which can lead to forfeiture, and forfeited Bitcoin can end up in the Strategic Bitcoin Reserve. Different laws can apply to the same coins.

Travel Rule. Exchanges collect sender and recipient information because of anti-money laundering rules. They freeze accounts and addresses because of sanctions law. These are two separate systems, with separate reasons.

New York BitLicense. New York regulates whether you run a virtual currency business. OFAC regulates who you transact with. Some people need to comply with both.

Bitcoin moves across borders, and sanctions law follows the people and the property involved.

OFAC lists addresses when it has them and entities when it has those. In 2026, it also opened a new route to sanction anyone operating in Iran's digital asset sector.

None of this makes ordinary self-custody unlawful. But if you are a US person, "I didn't know who owned that address" won't protect you if the address is listed, or belongs to someone who is.

Before sending meaningful amounts to a wallet you don't know, check it against OFAC's Sanctions List Search. If an exchange has already frozen your account, that is often its screening system at work. Talk to a sanctions lawyer, not an online forum.

To stay on top of new OFAC actions and every other rule that affects your Bitcoin, subscribe for free to The Bitcoin Act at thebitcoinact.xyz.

Can a US person send Bitcoin to an OFAC-listed address?
Dealing in property of a sanctioned person is prohibited, and a listed address identifies that property.

Is using Bitcoin a sanctions violation?
Using Bitcoin is legal. Transacting with a sanctioned person or address is not.

Is Tornado Cash still sanctioned?
No. The Treasury delisted it in March 2025 after the Fifth Circuit's Van Loon decision. That doesn't allow transactions with people who remain sanctioned.

If an exchange freezes my Bitcoin over a sanctions match, have I been found guilty?
The exchange is blocking the funds while it reviews the match. Guilt is a question for a court.

Disclaimer: This article is provided for general information and educational purposes only. It does not constitute legal, tax, or financial advice, and nothing here is written in a professional capacity. Laws and regulations change frequently and differ by jurisdiction, and some of the rules described above may have changed since publication. Always check the primary sources and consult a qualified professional in your jurisdiction before making any decision. The Bitcoin Act accepts no liability for any action taken on the basis of this content.