Crypto Industry Shifts Towards Network Layer for Sanctions Screening

Regulatory pressure is pushing the crypto industry towards a network layer that combines sanctions screening, counterparty discovery, and Travel Rule messaging in near real-time. The U.S. Treasury's Office of Foreign Assets Control has directed crypto firms to run risk-based programs that screen customers and transactions against sanctions lists since 2021.

The next step is more prescriptive, with a joint FinCEN/OFAC proposal requiring permitted payment stablecoin issuers to maintain sanctions programs with technical capabilities to block, freeze, reject, or prevent impermissible transactions on both primary and secondary markets. Enforcement-relevant volumes are part of the justification: between January 1, 2015, and November 21, 2025, FinCEN recorded roughly 55,000 suspicious activity reports referencing stablecoins.

Commercially, inter-VASPs networks already exist, with Notabene's network connecting over 2,000 regulated entities across 100+ jurisdictions and processing over $1 trillion in annual transaction volume. The Financial Action Task Force has warned that estimates suggest a majority of on-chain illicit activity is now transacted in stablecoins.