OFAC compliance for stablecoin projects

Stablecoin projects must screen across issuance, reserve management, and redemption, and freeze when required.

TL;DR

TL;DR: Stablecoin issuers should screen counterparties at issuance, screen the entities that touch their reserves, and screen redemptions, freezing or blocking any counterparty flagged by OFAC.

Screening at issuance

When a user mints or buys a stablecoin, the issuer should check the counterparty wallet and name against the SDN List and OFAC-listed wallets. The live dataset covers 947 listed crypto wallets and 19,218 SDN names, so a sanctioned wallet is caught at the point of issuance rather than after funds have moved.

Reserve management

Reserves are held with banks, custodians, and asset managers. The entities behind those relationships should be screened, and their ownership should be checked under the 50 Percent Rule, which treats any entity 50 percent or more owned by a blocked person as blocked itself.

Redemption and freezing

Redemptions are another choke point: a flagged redemption should be blocked before funds leave. When a match appears, dispute_open provides a review path, and the STAMP step of the 4-Gate protocol records the decision so the issuer can demonstrate a complete compliance history.