Stablecoins are rapidly evolving into the backbone of crypto with many organizations embarking on the process of issuing stablecoins. According to an early 2025 analysis by CCData, Tether’s USDT and Circle’s USD Coin (USDC) make up more than 90% of the stablecoin market cap. Specifically, USDT has around $166 billion in market cap and USDC around $68 billion. Even with their benefits, the fact that issuers can “block” or “blacklist” wallets means funds are frozen. This practice raises questions about decentralization, user rights, and broader implications amidst efforts for compliance and security of the crypto ecosystem. This article’s main purpose is to analyze the blocking of wallets of Tether and Circle with statistics. It will cover the most common reasons, regions and instances. Furthermore, the blocking and its effects on users and the industry will be looked at. Most importantly, we will look at the data and statistics as of August 2025. Finally, we will finish with a conclusion and future prediction.
Tether's Wallet Blocking: Scale and Scope
Tether, which is the issuer of USDT, has been blacklisting addresses, mostly due to regulatory or law enforcement agencies’ demands. As of August 2025, Tether’s blacklist totals over 5,188 addresses across Ethereum and Tron networks, with frozen assets worth $3.027 billion. The number of addresses on these sites continues to grow, which now cover 2,816 on Tron and 2,314 on Ethereum. Tether has added 39 new addresses in August alone, bringing the number of total addresses to 2417 according to a few trackers. Some trackers estimate that the overall number of banned addresses is about 2411. Dashboards like Dune Analytics are not completely exhaustive. In May this year, there were 30 new listings, the largest increase in 12 months. June 13-30, 2025 saw 151 blacklists, primarily on Tron. The numbers are not surprising as Tether has been aggressive. A recent report states that over 3480 wallets on Tron were analyzed for issues with their blacklisting process.
Tether’s blocks may happen because they think you are laundering money, financing terrorism, evading sanctions, either hacking or scamming. Tether collaborates closely with entities like the U.S. Secret Service and FBI, granting them access to user data for investigations. Tether, unlike decentralized protocols, has centralized control that allows it to freeze funds quickly. It does this for many reasons, such as when law enforcement wants to recover stolen funds. Moreover, it also complies with Office of Foreign Assets Control (OFAC) sanctions.
Geographical distribution reveals a global footprint, with blocks spanning 45 countries as reported in late 2024 data, which persists into 2025. High-risk areas tend to be sanctioned jurisdictions, e.g. Russia, Iran and North Korea. Addresses connected to suspicious activity show up in those regions. For instance, analysis shows clusters in Eastern Europe (e.g., Ukraine) and the Middle East (e.g., Israel), with 32 addresses frozen in 2023 related to terrorism and warfare in these areas. The on-chain data shows that TRON, which is especially popular in Asia and emerging markets, has the most blacklistings. There might be a link between this and the regions that evade the West’s financial system.
A prominent case study is the June 2025 freeze on $12.3 million USDT on Tron due to suspicious activity. Overall, Tether has blacklisted approximately $374,000 in stolen funds from hacks. Another example highlights a vulnerability. The slow processing of Tether’s multisig blacklisting allowed fraudsters to transfer 78 million dollars worth of illicit USDT before blacklisting. This left behind 4.88% of the funds across 3,480 wallets in Tron. These events showcased Tether's ability to recover funds but also demonstrated the operational loopholes.
Circle's Wallet Blocking: A More Measured Approach
According to USDC issuer Circle, it has a compliance-focused approach when blacklisting addresses. According to the firm, this mostly happens because of court orders and OFAC requirements rather than something proactive such as accounts sweeps. As of August 2025, approximately 310 crypto addresses have been blacklisted, and the USDC operations from these addresses have been frozen. The total value of the frozen USDC is $104.5 million. Circle froze 44 Ethereum addresses containing funds of USDC-ERC20 in early 2025. By the middle of 2025, Tether’s volume was much higher as Circle blacklisted $98.3 million over 292 addresses unlike $3 billion of Tether. As per the historical data available for 2022, only 38 unique addresses have ever been blocked. This shows that Circle has not been limiting any users unnecessarily.
The reasons Tether is facing problems are Anti-money laundering (AML), counter-terrorism financing, and sanctions compliance. Circle's terms expressly authorise the blocking of transfers to/from certain addresses, often linked to the US regulatory environment. Unlike Tether, Circle says it will only freeze funds when ordered legally.
The geographical data for Circle is less granular than for other entities, but the patterns fall into line with OFAC sanctions against features like settlements and transactions for addresses in sanctioned jurisdictions including Venezuela, Syria, and Russia. As Ethereum is prevalent on the USDC blacklist and enforcement in America, it’s clear that there are compliance issues in North America and allied regions. Official statistics are not publicly available on a global level but a lot of these cases involve scams or hacks which have a cross-border element.
One of the case studies describes how $100,000 USDC was frozen in 2020 at the request of law enforcement. They blacklisted an address linked to illicit activity. On one day in April 2021, seven addresses were blacklisted, with one transferring out 1,756 USDC before the freeze. In 2022, Circle blocked Tornado Cash-related addresses due to the established use of mixer protocols for laundering. In May 2025, Circle froze $57 million related to a scandal, showcasing the firm’s role in high-profile recoveries.
Implications for Users and the Crypto Ecosystem
The Tether and Circle wallet blocking has serious consequences. For users, it means that access to their funds may be at risk of loss without any possibility of recourse. Affected innocent parties due to the execution of wide sweeps on account of tainted funds or wrong associations often have frozen assets in their name. People avoid using this because it has risks of censorship, especially in unstable countries.
Blocking stablecoins further centralizes controls and contradicts Bitcoin’s decentralization ethos. Growing use of new stablecoins like USDT might boost compliance while reducing illicit usage (for example, only 0.49% of inbound USDT to blacklisted addresses is frozen on Tron), but may risk increases in runs and concentration – Tether and Circle already control 90% of the market. There are positive effects like increasing trust via asset recovery and aiding mainstreaming, but it could stunt innovation if overused and push users to decentralized alternatives. Worldwide, it strengthens the dominance of the USD while showing fraud vulnerabilities in irrevocable transactions.
Future Trends in Wallet Blocking
In the future, wallet blocking is expected to increase along with the mass adoption of stablecoin payment protocols, which is likely to impact payment systems by 2025. Tighter regulations, like the U.S. stablecoin bills, will mandate stablecoin issuers to up their AML/KYC game, resulting in more wallet blocking by issuers. Tether might keep its aggressive stance, meanwhile, Circle may expand but under more banking partnerships and possibly issue higher interest-bearing stablecoins to fixers. Backed stablecoins creating interoperability to limit any one issuer’s power is among the trends, as is AI-driven stablecoin monitoring for quicker detections. Nonetheless, resistance from the crypto community will give birth to decentralized stablecoins, which will comply while giving control to users. Stablecoins will efficiently gobble up the treasures of authority and cross-border regulations.
Ultimately, Blocking will be a last-resort tool to set standards on a regulated ecosystem.
