Can OFAC sanction a crypto protocol?

Yes. OFAC can designate a protocol's smart contracts, which blocks US persons from interacting with them.

TL;DR

TL;DR: Yes. OFAC can add a protocol's smart contract addresses to the SDN List, which prohibits US persons from transacting with them.

The precedent

The clearest example is Tornado Cash: OFAC designated the protocol's smart contract addresses, treating the code itself as the sanctioned party. That moved sanctions from individuals and companies to the code level, and it set the pattern for how OFAC treats decentralized protocols.

What a designation means

• The contract address lands on the SDN List.
• US persons are prohibited from interacting with it.
• Compliance shifts to exchanges and wallets that must block it.

What builders should do

Screen counterparty and contract addresses against listed crypto wallets before interacting. Use a live list synced hourly so a newly designated contract is caught immediately. Log every screen, and block on match. OFAC applies strict liability, so interacting with a designated contract can violate even without intent.

Why contracts, not companies

Protocols often have no company to sanction, so OFAC targeted the smart contracts themselves. That makes the addresses the sanctioned asset, and anyone who transacts with them a potential violator. For builders, the lesson is to screen contract addresses as well as wallets, because interacting with a designated contract is the violation, regardless of who deployed it. That is why the check must look at what the transaction touches, not just at who initiated it, and why the screen should run on every interaction, not a sample.