Do OFAC Sanctions Apply to Bitcoin? What the US Treasury Says

Yes. The Treasury Department’s Office of Foreign Assets Control (OFAC) states that sanctions obligations are the same whether a transaction is in digital currency or in traditional fiat currency. US persons must not deal with sanctioned persons, and Bitcoin addresses tied to them can appear on OFAC’s Specially Designated Nationals (SDN) List under the symbol “XBT.”

OFAC’s listings of addresses are “not likely to be exhaustive,” and its civil penalties are generally based on strict liability. On March 21, 2025, OFAC removed Tornado Cash from the SDN List, after a federal appeals court held that its immutable smart contracts were not “property” that could be blocked.

OFAC is the Office of Foreign Assets Control, part of the US Department of the Treasury. It administers US economic sanctions. Its main tool for individuals and entities is the Specially Designated Nationals and Blocked Persons List, known as the SDN List.

OFAC has said it intends to use these tools in the digital currency space. In FAQ 561, it states: “OFAC will use sanctions in the fight against criminal and other malicious actors abusing digital currencies.”

Yes, for sanctions purposes. FAQ 560 asks whether compliance obligations are the same “regardless of whether a transaction is denominated in digital currency or traditional fiat currency.” The answer begins: “Yes, the obligations are the same.”

The same FAQ explains what that means. Persons subject to OFAC’s rules must block the property of persons on the SDN List and of entities those persons own 50 percent or more, and must not deal with them. It adds that firms handling digital currency should build risk-based compliance programs, which typically include screening against sanctions lists.

Broadly. FAQ 559 defines virtual currency as “a digital representation of value that functions as (i) a medium of exchange; (ii) a unit of account; and/or (iii) a store of value;” and that “is neither issued nor guaranteed by any jurisdiction.” Bitcoin fits that definition.

US persons, wherever they are. OFAC’s Sanctions Compliance Guidance for the Virtual Currency Industry states: “All U.S. persons are required to comply with OFAC regulations.” It describes US persons as including “all U.S. citizens and lawful permanent residents, wherever located.”

The guidance also addresses the Bitcoin industry directly: “Members of the virtual currency industry are responsible for ensuring that they do not engage, directly or indirectly, in transactions prohibited by OFAC sanctions.”

OFAC’s standard is strict. The guidance states that “OFAC may impose civil penalties for sanctions violations generally based on a strict liability legal standard.”

In plain terms, civil liability under that standard does not depend on whether the person knew the other party was sanctioned. That is why OFAC encourages screening.

In a fixed format. FAQ 563 explains that each listed address includes “their unique alphanumeric identifier (up to 256 characters)” and identifies the currency, for example “Bitcoin (XBT).”

Each address has its own field. According to the FAQ, the structure “will always begin with ‘Digital Currency Address’, followed by a dash and the digital currency’s symbol,” for example “Digital Currency Address - XBT.” The address itself follows.

Yes. FAQ 594 states: “Yes, it is possible to query for digital currency addresses using OFAC’s Sanctions List Search tool.”

No. FAQ 562 states: “OFAC’s digital currency address listings are not likely to be exhaustive.” If a party finds an address it believes belongs to a person on the SDN List, it “should take the necessary steps to block the relevant digital currency and file a report with OFAC.”

An address that is not on the list is therefore not, by that fact alone, cleared. The obligation attaches to the sanctioned person and their property, not only to the listed addresses.

It has to be blocked and reported. Under FAQ 646, once a US person determines that it holds virtual currency that must be blocked, it must deny all parties access to it and follow OFAC’s rules on holding and reporting blocked property.

The FAQ sets out several practical points:

OFAC addresses this in FAQ 647, which asks whether an institution should tell its customer that it blocked access to their digital currency, and how to explain it.

A risk-based compliance program. OFAC’s virtual currency guidance describes the elements it expects, including internal controls. Among them, it recommends that companies “Incorporate geolocation tools and IP address blocking controls” to help prevent dealings with sanctioned jurisdictions.

A court ruled against the designation, and OFAC removed it. In Van Loon v. Department of the Treasury, No. 23-50669, the US Court of Appeals for the Fifth Circuit ruled on November 26, 2024 that “Tornado Cash’s immutable smart contracts” are “not the ‘property’ of a foreign national or entity.”

The court explained: “The immutable smart contracts at issue in this appeal are not property because they are not capable of being owned.” It concluded that they could not be blocked under the International Emergency Economic Powers Act (IEEPA) and that OFAC had exceeded its statutory authority. Its disposition: “We REVERSE and REMAND to the district court.”

On March 21, 2025, OFAC acted. Its Federal Register notice states: “On March 21, 2025, OFAC removed from the SDN List the entity listed below.” It adds that the entity “is no longer subject to the blocking provisions of E.O. 13694, as amended, or E.O. 13722.”

No. The court’s holding was about immutable smart contracts that “are not capable of being owned.” It did not address Bitcoin held at an address controlled by a sanctioned person. OFAC’s FAQs on listing digital currency addresses and blocking virtual currency remain on its website, as cited throughout this guide.

The sources above lead to a few clear points:

Yes. In FAQ 560, OFAC states that compliance obligations are the same whether a transaction is in digital currency or traditional fiat currency: “Yes, the obligations are the same.” US persons must block property of sanctioned persons and must not deal with them, whatever the currency.

Each listed address has its own field. According to FAQ 563, the entry begins with “Digital Currency Address,” a dash and the currency symbol, which for Bitcoin is XBT, followed by the address’s unique alphanumeric identifier of up to 256 characters.

Yes. OFAC’s FAQ 594 states that “it is possible to query for digital currency addresses using OFAC’s Sanctions List Search tool.” OFAC also warns, in FAQ 562, that its digital currency address listings “are not likely to be exhaustive,” so an address missing from the list is not cleared by that fact alone.

Under FAQ 646, the US person holding it must deny all parties access to it and follow OFAC’s blocking rules. It does not have to be converted into fiat currency. It must be reported to OFAC within 10 business days, then annually while it stays blocked.

Generally, yes. OFAC’s virtual currency guidance states that “OFAC may impose civil penalties for sanctions violations generally based on a strict liability legal standard.” The same guidance states that “All U.S. persons are required to comply with OFAC regulations,” which it describes as covering US citizens and lawful permanent residents wherever located.

No. OFAC removed Tornado Cash from the SDN List on March 21, 2025. Earlier, on November 26, 2024, the Fifth Circuit held in Van Loon v. Department of the Treasury that Tornado Cash’s immutable smart contracts are not property because they “are not capable of being owned.”

This article is general information and not legal advice.

Sanctions are one layer of Bitcoin law, and every country adds its own. Compare more than 140 countries on The Bitcoin Act’s interactive Global Bitcoin Regulatory Map: https://thebitcoinact.xyz/bitcoin-legal-map

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