Prohibited Transactions

Definition ∞ Prohibited Transactions are financial activities or transfers of digital assets that are explicitly forbidden by legal statutes, regulatory frameworks, or a blockchain protocol’s rules. These restrictions are typically implemented to prevent illicit activities such as money laundering, terrorist financing, sanctions evasion, or market manipulation. Engaging in such transactions carries severe penalties.
Context ∞ The identification and prevention of prohibited transactions are paramount for regulatory compliance in the digital asset space. Jurisdictions globally are strengthening their anti-money laundering and counter-terrorist financing measures, requiring exchanges and financial institutions to implement robust transaction screening protocols. The ongoing challenge involves balancing privacy concerns with the need for effective surveillance against illicit financial flows on decentralized networks.