Sanctions, blacklists and blockchain analytics: how crypto gets "censored"

Crypto was marketed as censorship-resistant money - and at the level of base protocols this is true. But the practical stack that most people use is censorable at several points.

Points of control

• Centralized stablecoins. The issuers of USDT and USDC have address-freezing functionality - and it is applied regularly upon requests from authorities. Frozen billions are public statistics.
• Exchanges and on/off-ramps. Fiat entry and exit is the main checkpoint: KYC, screening of funds' sources, blocks on suspicion.
• Blockchain analytics. Platforms tag addresses (exchanges, mixers, darknet, sanctioned) and sell scoring. The "tainted" history of coins follows them through the transfer graph - and can close the door to an exchange years later.
• Sanctions on code: the Tornado Cash precedent - a smart contract was placed on a sanctions list for the first time. Some of the sanctions were later challenged in court, but the precedent of pressure on infrastructure has been set.

What remains outside of control

The base protocols themselves: no one will stop a $BTC or $ETH transaction between one's own addresses. Censorship lives at the edges - where crypto meets fiat and services. Understanding this geography is part of literacy: freedom of the protocol does not equal freedom of the stack.