The US Treasury just Marie Kondo’d its sanctions list. The Office of Foreign Assets Control removed 76 entries from its Specially Designated Nationals and Blocked Persons List on May 28, marking the most significant housekeeping effort the agency has undertaken in years.

The purge targeted exactly the kind of entries you’d expect from a list that rarely gets pruned: deceased individuals, decommissioned vessels, and dissolved illicit networks. An interagency review concluded that none of these entities currently posed any risk to US interests.

Why the sanctions list got so bloated

Annual new SDN designations rose from roughly 880 in 2017 to over 3,000 in 2024. That’s a nearly four-fold increase in just seven years, with very little corresponding effort to remove entries that had outlived their usefulness.

Every single one of those entries creates work for someone. Banks, brokerages, payment processors, and yes, crypto exchanges all have to screen transactions against the SDN List. More entries means more false positives. More false positives means more compliance staff, more delayed transactions, and more cost passed along to customers.

Treasury Secretary Scott Bessent announced the modernization initiative at the “No Money For Terror” conference in Paris, framing it as a shift in philosophy. The goal is to treat sanctions as tools for influencing behavioral change rather than permanent measures.

What this means for crypto

No crypto-related entities or tokens were part of this particular delisting round. Zero. But the broader signal matters more than the specific names removed.

OFAC has been one of the most consequential regulators in crypto’s recent history. Its 2022 sanctioning of Tornado Cash sent shockwaves through the industry, raising fundamental questions about whether code could be sanctioned the same way people and companies are.

For crypto compliance teams that spend enormous resources screening against the SDN List, fewer outdated entries means fewer false positives. That’s a direct operational improvement. Every false positive triggers a review process that costs time and money. Reducing the noise in the system lets compliance teams focus on actual suspicious activity rather than chasing names that haven’t been relevant in years.

The compliance cost equation

The explosion from 880 to over 3,000 annual designations didn’t come with a corresponding increase in resources for the companies responsible for compliance. Banks and financial institutions absorbed those costs, and they weren’t shy about passing them downstream.

The Treasury’s stated aim is to reduce false positives in screening processes across financial institutions. That’s a practical improvement that could meaningfully lower compliance costs for traditional finance and crypto firms alike.