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How Does Regulatory Compliance Affect the Fungibility of Some Tokens?

Regulations (e.g. AML) can force issuers to implement blacklisting features, making a "tainted" token non-interchangeable.
Greeks.Live16.11.25

How Does Regulatory Compliance Affect the Fungibility of Some Tokens?

Regulatory compliance can impose constraints that compromise a token's inherent fungibility. For example, a token designed to meet strict Anti-Money Laundering (AML) requirements might include a feature allowing the issuer to "blacklist" or freeze specific tokens associated with illegal activity.

This means a blacklisted token is no longer interchangeable with a clean one, breaking the principle of fungibility.

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