US Treasury Department has released new guidelines on sanctions for crypto businesses

US Sanctions Oversight Office has focused on the crypto industry. On October 15, the Treasury Department’s Office of Foreign Assets (OFAC) issued a new brochure with guidelines for the crypto industry on how to navigate US sanctions.

Content of instructions

The actual content of the guidelines is not particularly revolutionary, but it largely promotes the idea that OFAC expects virtual currency operators to bear the same responsibility for avoiding breaches of sanctions as other financial institutions. The instructions say:

“In general, U.S. individuals, including members of the virtual currency industry, are responsible for ensuring that they do not engage in unauthorized transactions or transactions with sanctioned individuals or jurisdictions.”

OFAC appoints a number of entities that need to develop risk assessment programs, including “technology companies, exchanges, administrators, miners and wallet providers, as well as more traditional financial institutions that may have exposure to virtual currencies or their service providers”.

Geofencing

Perhaps most interestingly, OFAC emphasizes the geolocation of IP addresses and, in particular, the analytical tools available to identify VPN usage. Geofencing by crypto exchanges and operators is an increasingly common practice, but the use of VPNs can circumvent almost all of these barriers to trading. OFAC’s increased oversight of VPNs could dramatically change the level of access for people in the United States to platforms that are legally prohibited from using.

Since 2020, when OFAC first focused on cryptocurrency wallet addresses, it has become increasingly involved in the crypto industry. At the end of September, it announced its first ever sanctions against the crypto exchange, an over-the-counter table based in Russia called Suex.

Conclusion

Treasury Department has issued new guidelines and companies must develop risk assessment programs. Efforts to regulate or control cryptocurrencies are growing. How do you think it will go?