@tabclapham

To manage sanctioned address exposure, compliance rules can be designed to exclude high-risk wallets. Analysts can measure the effect of such exclusions on token liquidity by calculating the percentage of current activity associated with flagged addresses. If liquidity shrinks by more than 10–15%, the token’s utility may be impaired. Modeling should incorporate both short-term disruptions and long-term trust gains from compliance signaling. By formalizing exclusion rules, projects can balance regulatory acceptance with liquidity preservation, ensuring valuation captures both the immediate cost and the credibility benefit of compliance.

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