Tether introduces policy to freeze wallets linked to OFAC-sanctioned entities, enhancing regulatory compliance and security.
In a move to align with U.S. regulatory standards, Tether, the company behind the popular stablecoin, has introduced a new policy for freezing wallets associated with individuals and entities listed by the Office of Foreign Assets Control (OFAC). This action marks Tether’s latest effort to enhance cooperation with law enforcement and regulatory bodies globally.
Starting December 1, Tether has proactively applied controls in the secondary market to identify and restrict transactions linked to those on the OFAC’s Specially Designated Nationals (SDN) List. This list includes companies and individuals under sanctions from various countries. The implementation of this policy is not only a compliance measure but also an initiative to bolster the security framework already in place at Tether.
Ensuring Security
The U.S. Department of the Treasury, through the SDN List, targets to mitigate the risks of cryptocurrency transactions related to unlawful activities, such as funding terrorism and the illegal distribution of substances like fentanyl. Tether’s recent policy shift, which involves freezing wallets previously added to the SDN List, is a departure from its earlier stance. In a contrasting move in August 2022, Tether had stated that it would not independently freeze wallets associated with Tornado Cash, a controversial mixer, unless directed by law enforcement agencies. Tornado Cash has reportedly been utilized for laundering over $7 billion in cryptocurrencies since 2019.
Paolo Ardoino, Tether’s CEO, emphasizes that this initiative will enhance the overall security and integrity of the stablecoin ecosystem. By actively freezing new and existing wallets on the SDN List, Tether aims to promote the responsible use of its technology and ensure a safer environment for all stablecoin users.
Tether, headquartered in Hong Kong, has seen its market capitalization soar to unprecedented levels amid the U.S.’s intensified scrutiny of cryptocurrency firms. Currently, with a market capitalization of $90 billion, Tether dominates nearly 70% of the stablecoin market, reflecting robust demand for this digital currency.
This proactive approach by Tether illustrates its commitment to regulatory compliance and its role in fostering a secure and reliable cryptocurrency landscape.