Freeze (Blacklist)
The ability to block specific addresses from sending or receiving USDC, used for sanctions compliance and law enforcement.
USDC's smart contract includes a freeze function that Circle can use to block specific addresses. Once frozen, that address can't send or receive USDC. The tokens still exist but can't be moved.
This function is used sparingly and primarily for legal compliance: sanctioned entities, court orders, and law enforcement requests. Circle publishes the list of frozen addresses on the blockchain, so it's transparent.
The freeze function is one of the key differences between USDC and decentralized stablecoins like DAI. Some people see it as a necessary compliance tool. Others see it as a centralization risk. For most regular users, it's a non-issue, but it's important to understand that USDC is a permissioned token with a centralized issuer.
Related Terms
Sanctions
Government restrictions that prohibit financial transactions with specific individuals, organizations, or countries.
AML (Anti-Money Laundering)
Laws and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.
USDC (USD Coin)
A regulated, fully-backed stablecoin pegged to the U.S. dollar. Each USDC is redeemable for $1.
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This definition is provided for educational purposes. USDC.org is an independent resource and is not affiliated with Circle Internet Financial.