The growth rate of crypto-denominated fentanyl sales has experienced a significant decline in 2023, according to research conducted by TRM Labs. The research reveals a correlation between the slowdown and the aggressive measures taken by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) in pursuing individuals and entities associated with fentanyl production and distribution. This article examines the impact of OFAC sanctions on online fentanyl sales involving cryptocurrency and the potential consequences it may have.
TRM Labs’ study, which analyzed over 100 online vendors of fentanyl and its precursors, highlights a growth decrease of just under 60% for the first three quarters of 2023. This marks a significant contrast to the average growth rate of 155% recorded since 2019. The decline is attributed to the extensive sanctions imposed by OFAC, targeting major players in the fentanyl industry. The number of designations has risen substantially in recent years, with 82 individuals and entities sanctioned in 2023 compared to only five and seven in 2019 and 2020, respectively.
TRM’s analysis shows a correlation between major sanctions and a decline in online fentanyl sales involving cryptocurrency. Sales volumes experienced a significant drop in April and May, aligning with the imposition of sanctions. Another significant plunge occurred in October following the designation of 28 individuals and entities. While it is difficult to attribute the decrease in sales solely to OFAC’s actions, the disruptions caused by the sanctions undoubtedly affect supply chains and increase risks for those involved with targeted manufacturers.
Despite the limited cooperation from Beijing with U.S. law enforcement, primarily China-based entities have been relatively less affected. However, international buyers now face heightened scrutiny from U.S. authorities. The decrease in sales does not necessarily indicate a reduction in demand but rather suggests that new vendors may emerge to fill the gap left by those who have been sanctioned. However, these new players will encounter greater pressure from both U.S. and international law enforcement agencies.
The decline in growth rate of crypto-denominated fentanyl sales in 2023 can be attributed to the aggressive measures taken by OFAC through sanctions. The correlation between major sanctions and a decline in online sales involving cryptocurrency is evident. While the decrease in sales volume may not indicate a decrease in demand, it highlights the disruption caused by the sanctions. New vendors may emerge, but they will face increased pressure from law enforcement agencies. The battle against fentanyl sales remains ongoing, exemplified by the efforts of OFAC and its impact on the market landscape.