OFAC Frequently Asked Questions on Virtual Currency
OFAC Frequently Asked Questions on Virtual Currency
OFAC and Digital Currency: Key Definitions and Guidance
Source: U.S. Department of the Treasury – Office of Foreign Assets Control (OFAC), Updated October 15, 2021
OFAC’s sanctions compliance obligations apply to transactions involving digital assets just as they do to traditional financial systems. The agency’s guidance clarifies how digital currency activities—including those involving blockchain, wallets, and exchanges—fall within the scope of U.S. sanctions laws.
Question 559: How Does OFAC Define Digital Currency-Related Terms?
For sanctions compliance purposes, OFAC defines the following key terms:
- Digital Currency:
A broad term encompassing sovereign cryptocurrency, non-fiat virtual currency, and digital representations of fiat currency. - Virtual Currency:
A digital representation of value that serves as a medium of exchange, unit of account, and/or store of value, but is not issued or guaranteed by any jurisdiction. - Digital Currency Wallet:
Software or mechanisms used to hold, store, and transfer digital currency. Wallets contain:- Addresses – identifiers used to receive funds
- Private Keys – cryptographic credentials used to authorize transfers
- Balance Tracking – real-time account updates for held assets
- Wallet Provider:
An individual or entity offering software for users to create and manage digital currency wallets.- Hosted Wallet Provider: Businesses that maintain custody of users’ wallets and often offer exchange, payment, and transfer services.
- Digital Currency Address:
An alphanumeric identifier associated with a wallet, representing a potential destination for digital currency transfers.
Question 646: How Do I Block Digital Currency Under OFAC Regulations?
When a U.S. person identifies virtual currency that must be blocked under OFAC sanctions, they are legally required to:
- Deny access to all prohibited parties under OFAC regulations;
- Comply with reporting and holding obligations pursuant to 31 C.F.R. § 501.603;
- Implement risk-based compliance controls to ensure proper handling of the blocked assets.
Example of a Blocking Procedure
A virtual currency business may:
- Block each affected wallet individually; or
- Consolidate the funds into a single “blocked” omnibus account,
provided adequate internal controls exist to ensure the assets are only released upon OFAC authorization or when legal restrictions are lifted.
Important Compliance Notes
- There is no requirement to convert blocked virtual currency into fiat (e.g., USD).
- Blocked digital assets do not need to be placed in interest-bearing accounts.
- All blocked virtual currency must be reported to OFAC within 10 business days of blocking and annually thereafter as long as the assets remain blocked.
Contact OFAC for Clarification
If you have compliance or reporting questions:
📞 (202) 622-2490 | ✉️ OFAC_Feedback@treasury.gov
Visit OFAC’s Official Website →
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