In a move to align with U.S. regulators, stablecoin issuer Tether is implementing a policy to freeze wallets linked to sanctioned entities in the secondary market. Tether has been enforcing controls to halt activities associated with individuals and entities on the Office of Foreign Assets Control SDN List, which includes those under sanctions from sanctioned countries.
This initiative is an extension of Tether’s existing security measures and represents a concerted effort to collaborate more closely with global regulatory and law enforcement bodies. The U.S. Treasury uses the SDN List to prevent crypto transactions linked to illegal activities like terrorism financing and unauthorized fentanyl distribution.
Despite previous reluctance, such as its stance on Tornado Cash in August 2022, Tether has already frozen wallets on the SDN List. Tornado Cash has reportedly been used for laundering over $7 billion in cryptocurrency since 2019.
Paolo Ardoino, Tether’s CEO, stated that voluntarily freezing wallets on the SDN List strengthens the use of stablecoin technology and ensures a safer ecosystem for users. Based in Hong Kong, Tether’s USDT has seen its market capitalization soar to $90 billion, dominating nearly 70% of the stablecoin market, amid increased scrutiny of crypto firms in the U.S.