--- title: "Stablecoin Compliance and Regulatory Controls on Tempo" description: "Explore stablecoin compliance and regulatory controls on Tempo. Discover native features for stablecoin issuers, wallet providers, and enterprises." path: "/blog/compliance-controls/" date: "2026-02-19" label: "Stablecoins" image: "/cards/blog-compliance-controls.webp" --- **_Compliance is a prerequisite for institutional adoption of stablecoins. Tempo provides native token permissions and receive policies that issuers, wallet providers, and enterprises can use within their compliance programs. Technical controls do not establish legal compliance. Work with our compliance partners, including [Blockaid](https://www.blockaid.io/), [Chainalysis](https://www.chainalysis.com/), [Sardine](https://www.sardine.ai/), and [TRM](https://www.trmlabs.com/solutions/compliance-360), or start building with [our docs](https://docs.tempo.xyz/docs/protocol/tip20/overview)._** Tempo was designed with input from leading financial institutions, who emphasized that compliance is a core requirement. Stablecoin issuers, banks, and fintechs operate under strict regulatory frameworks and supervision. For these institutions, compliance cannot be an afterthought. Tempo's design reflects these requirements. Rather than forcing institutions to build custom applications and smart contracts for basic compliance functions, Tempo provides these capabilities natively. Onchain controls provide records of their execution. Institutions still need identity checks, screening, internal decisions, and other records to operate their compliance programs. ## Design principles For institutions, code must support the law. When designing Tempo's compliance capabilities, we focused on four priorities. - **AML and sanctions.** Token policies can enforce address restrictions based on an institution's screening and review decisions. The policy registry does not itself perform identity checks or sanctions screening. - **Separation of responsibilities.** Stablecoin issuers and custodians have different regulatory obligations. Issuers care about token supply integrity and controlling token circulation. Custodians care about their KYC perimeter and protecting clients from fraud. - **Operational controls.** Institutions need tools to respond to emergencies and take corrective action. Onchain events should be linked to internal approvals and case records so teams can explain both the action and its basis. - **Remediation.** Restricted transfers and blocked receipts need defined handling. Technical permissions, recovery authority, and legal authorization are separate requirements. > As a high-throughput, low-cost base layer designed specifically for payments, Tempo has the potential to unlock onchain global payments at scale. We’re proud to partner with Tempo and its growing ecosystem to provide the risk management and compliance capabilities needed to support secure and trusted onchain payments. > > — Ankush Sharma, Head of Blockchain Ingestion, TRM Labs ## How compliance controls work on Tempo Compliance controls on Tempo consist of three components: TIP-20 functions, Tempo Policies, and Transfer Memos. ![TIP-20 functions](/images/blog/-__19_.webp) ### TIP-20 functions Tempo's native token standard, [TIP-20](https://docs.tempo.xyz/docs/protocol/tip20/overview), includes pause and unpause controls for token transfers. Ordinary burning from an issuer's own balance and burning from a blocked address are different operations. The latter requires the dedicated `BURN_BLOCKED_ROLE` and the applicable token-policy checks. [Role-based permissions](https://docs.tempo.xyz/docs/protocol/tip20/spec#tip-20-roles) let institutions separate these authorities and retain onchain records of their use. ![Tempo Policies](/images/blog/-__20_.webp) ### Tempo Policies [Tempo Policies](https://docs.tempo.xyz/docs/protocol/tip403/spec) complement TIP-20 functions by defining token access rules. Simple allowlist and blocklist policies manage address membership. Compound policies can apply separate rules to senders, transfer recipients, and mint recipients. - **Token-level policies** are managed by stablecoin issuers and apply globally across all holders. Policies can be shared across multiple tokens, enabling consistent enforcement. - **Account-level receive policies** are available for incoming TIP-20 transfers and mints. An account chooses permitted senders, accepted tokens, and a recovery authority. These are receive controls, not a general outbound transaction policy. If token-level checks pass but a receive policy blocks delivery, the call succeeds and funds are held in `ReceivePolicyGuard` instead of reaching the receiver. Follow the [receive-policy guide](https://docs.tempo.xyz/docs/guide/payments/configure-receive-policies) to handle the resulting receipt. ![Transfer Memos](/images/blog/-__21_.webp) ### Transfer memos [Transfer memos](https://docs.tempo.xyz/docs/guide/payments/transfer-memos) attach a 32-byte reference through supported TIP-20 transfer methods. An application can use an opaque reference to connect a payment with separately exchanged compliance records. A memo does not transmit a complete Travel Rule message or establish compliance. Keep personal information offchain, confirm wallet support, and verify the token, recipient, amount, and successful delivery before relying on a matching reference. > In an exam, regulators don’t ask whether you had alerts. They ask what you did about them. Who had authority to act? How quickly did they move? Can you show a clear record of the decision? Compliance teams carry that accountability. If enforcement sits outside the asset layer, response slows down and risk compounds. Controls have to live where the value moves. That’s what makes them real. > > — Soups Ranjan, CEO & Co-Founder, Sardine ## How institutions use compliance controls Institutions can use these controls within broader regulatory and operational workflows: - **Address restrictions.** Issuers can apply token policies to block transfers involving specified addresses. The applicable sender, recipient, and mint-recipient rules determine authorization; the institution supplies and maintains the underlying screening decisions. - **Custodial wallet receipts.** A custodian can configure a receive policy for accepted tokens and incoming senders. Blocked funds are held separately with a recoverable receipt. The configured authority must follow the claim rules, and the application must not credit the customer as though delivery succeeded. - **KYC-based access.** An institution can populate allowlists using its own verified customer records. The policy enforces address membership; it does not perform KYC or prove that the customer-to-address mapping remains accurate. - **Restricted-asset handling.** Authorized roles can burn eligible blocked balances under the token policy. Held receive-policy receipts have separate claim and burn rules. Burning reduces token supply; it does not itself deliver recovered funds to another party or establish legal authority for the action. - **Emergency response.** Authorized roles can pause and unpause token transfers. Administrative functions and specific protocol operations have their own rules, so integrations should follow the [TIP-20 pause specification](https://docs.tempo.xyz/docs/protocol/tip20/spec#pause-controls) rather than assume every operation stops. > At Blockaid, we are excited to partner with Tempo to bring security & compliance to Tempo’s ecosystem. Blockaid offers a comprehensive real-time security platform that protects institutions and consumers alike from three onchain risk vectors - security vulnerabilities, sanctions / AML risk, and fraudulent transactions. > > — Ido Ben-Natan, Co-founder & CEO, Blockaid ## Start building on Tempo Whether you are issuing stablecoins or building custodial wallets, we can help you get started: Visit the Learn section of the Tempo documentation to understand stablecoins, how they work, and the payment use cases they enable. If you're familiar with blockchain development, head to our docs to connect to Tempo, access test funds, download SDKs, and start building with Tempo Transactions. Explore the Partners directory to check current Tempo support, integration scope, and prerequisites for infrastructure providers. _For guidance on implementing compliance controls for your use case, [reach out](https://tempo.xyz/contact) to our Enterprise Team._