Tether, the company behind the prominent stablecoin, has announced a significant policy change in its approach to regulatory compliance and cooperation with law enforcement agencies. In a recent blog post dated December 9, Tether revealed its initiative to voluntarily freeze wallets associated with individuals or entities on the United States Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. .
This list includes individuals and companies controlled or owned by sanctioned countries, marking them as entities that U.S. individuals and companies are generally prohibited from doing business with.
Tether intensifies its efforts against cryptocrimes
Tether’s latest policy, effective December 1, aims to strengthen the security infrastructure around its stablecoin operations. By implementing controls to freeze activities linked to sanctioned individuals on OFAC’s SDN list, Tether is stepping up its efforts to prevent illicit activities such as terrorist financing and the unauthorized distribution of substances such as fentanyl. This move is in line with broader initiatives by the US Treasury Department, which uses the SDN List to restrict crypto transactions potentially linked to criminal activity.
The voluntary wallet freezing policy is expected to improve Tether’s security protocols, underscoring the company’s dedication to promoting a secure and compliant stablecoin ecosystem. Paolo Ardoino, CEO of Tether, emphasized the importance of this initiative, stating: “By executing the voluntary freezing of the wallet addresses of new additions to the SDN list and the freezing of previously added addresses, we will be able to further strengthen the use positive of stablecoin technology and promote a more secure stablecoin ecosystem for all users.”
Decisive action against sanctioned crypto addresses
This policy marks a notable change in Tether’s approach to regulatory compliance. In August 2022, Tether stated that it would not proactively freeze OFAC-sanctioned Tornado Cash addresses unless explicitly stated to do so by authorities. Tornado Cash, a decentralized cryptocurrency mixer, has been implicated by OFAC in laundering more than $7 billion in cryptocurrency since 2019.
Tether’s decision to proactively freeze wallets on the SDN list is an important step, demonstrating the company’s changing position regarding regulatory cooperation. This move comes amid increased scrutiny of cryptocurrency companies by US regulators.
Despite regulatory challenges, Tether’s market capitalization has soared to $90 billion, capturing nearly 70% of the stablecoin market. This increase in market capitalization highlights the strong demand for Tether, even in a regulatory-constrained environment.