OFAC Defi FAQs
Answers to common questions about OFAC sanctions and DeFi, covering protocols, smart contracts, and the Tornado Cash precedent.
TL;DR
TL;DR: DeFi protocols and smart contracts are in OFAC scope, with Tornado Cash as the precedent. Screen an address before an agent or protocol interacts with it.
How OFAC reaches DeFi
OFAC designated Tornado Cash, a smart contract mixing service, showing that protocol and contract addresses can be blocked property. A DeFi interaction that routes value through a designated contract can trigger strict liability for the operator, even when the flow is automated. Address-level screening before interaction is therefore the core control.
Common questions
- Can a smart contract be sanctioned? Yes, Tornado Cash set the precedent for designating contract addresses.
- What should be screened? The target contract or counterparty address before any send or interaction.
- How is the check added? One HTTP call in under 100 ms, returning ALLOW or BLOCK.