Sam Bankman-Fried Proposes ‘Respect’ for OFAC in Crypto Regulatory Framework

“For Sam to suggest that the industry ‘should respect OFAC’ is unbecoming,” ShapeShift co-founder Erik Voorhees said

article-image

Blockworks Exclusive Art by Axel Rangel

share
  • “OFAC does not deserve respect. It deserves repeal,” Voorhees said
  • Several crypto observers are combating Bankman-Fried’s DeFi proposals

Sam Bankman-Fried asked for critiques on his proposed crypto regulatory framework this week. The FTX head is certainly getting what he asked for. 

Bankman-Fried’s outline on Wednesday included a disclaimer, saying the potential set of standards is not “exactly correct” and is “just a draft.” 

In the blueprint, he laid out how he believes hacks can be limited and how FTX plans to decide which cryptoassets are securities. He also proposed customer protection standards and a mechanism for audits to confirm stablecoins are appropriately backed by fiat. 

He also proposes regulation using “blocklists,” a move that would ban blockchain transfers between sanctioned parties. 

“Maintaining a blocklist is a good balance: prohibiting illegal transfers and freezing funds associated with financial crimes while otherwise allowing commerce,” he said. 

Added: Bankman-Fried: “Everyone should respect OFAC’s sanctions lists (which, by the way, is already the law).”

A US Treasury subsidiary, OFAC, or the Office of Foreign Asset Control, enforces sanctions against foreign nation-states, blacklisted individuals and red-flagged corporate entities. The aim is to prevent any and all US trade with those slapped with sanctions — a measure that is particularly in play at the moment regarding Russian oligarchs, following the country’s invasion of Ukraine. 

Loading Tweet..

A spokesperson for FTX declined to comment. 

Concerns over ‘respect’ for OFAC in SBF’s regulatory framework

On the face, Bankman-Fried appears to be suggesting mostly logical rules that would safeguard consumers, especially vulnerable retail investors. 

But Erik Voorhees, ShapeShift co-founder, took up a number of concerns with the crypto billionaire. Voorhees, an early Bitcoin adopter, is one of several high-profile industry participants to speak out against some of Bankman-Fried’s proposals. 

Although Voorhees agreed on the need for transparency and scam prevention, he did have opposing views on two key proposals: respecting OFAC and licensure for DeFi-related activities.

He said OFAC’s list includes entire countries and took the example of sanctioned Iran, pointing out that it’s illegal for an American to do business with an Iranian.

“You know those insanely brave Iranian women standing up against oppression in Iran right now? Those women espousing the greatest American virtue of individual liberty and doing so while literally facing torture and death?” he said, referring to the women protesting against the “morality police” in Iran over the death of 22-year-old Mahsa Amini. 

“If you’re an American, it is illegal for you to interact economically with those women, because of OFAC.”

Bankman-Fried suggesting that the crypto industry should respect OFAC is “unbecoming,” he added.

SBF advocates licensure for DeFi activities

Bankman-Fried’s latest thoughts on DeFi are the “most problematic” of his new blueprint, according to Voorhees. 

The crypto entrepreneur said the likes of hosting websites on platforms such as Amazon Web Services, which provide a US retail front-end for decentralized protocols, should require some license or registration. 

Such a move would require know-your-customer [KYC] checks to use a platform such as Uniswap.

Loading Tweet..

“It would mean 80 million Iranians would be prohibited from accessing functions on Etherscan,” he said. “It would even mean a non-custodial Bitcoin wallet interface would be required to spy on its users and report suspicious activities to FinCEN [Financial Crimes Enforcement Network].”

Crypto exchanges such as FTX, Kraken and Coinbase already fall subject to those obligations, he said. 

“With Sam’s above suggestion, the burdens would be expanded to every front end access point to the world of DeFi,” Voorhees said.

Bankman-Fried admits he could be wrong about some of his suggested policies — and clarified he didn’t mean DeFi should be censored.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Figure, founded by former SoFi CEO Mike Cagney, has emerged as a leader in onchain RWAs, with ~$17.5B publicly tokenized. The platform’s ecosystem volume is growing ~40% YoY as it expands beyond HELOCs into student loans, DSCR loans, unsecured loans, bankruptcy claims, and more. Operationally, Figure cuts average loan production cost by ~93% and compresses median funding time from ~42 days to ~10, creating a durable speed-and-cost advantage.

article-image

If the president breaks the Fed, he’ll own the budget problems

article-image

Combining Franklin Templeton’s tokenization expertise with Binance’s trading infrastructure could speed crypto adoption, companies say

article-image

The firm’s upcoming filing comes as competition heats up over the USDH stablecoin

article-image

Robinhood and Coinbase are vying for user attention with new social features that could rival Twitter

article-image

Atkins backs predictable digital asset framework through Project Crypto, marking a departure from prior enforcement tactics

by Blockworks /
article-image

Following a roundtable, the startup emerges as frontrunner, despite entries from Paxos, Ethena, and others