diff --git a/packages/contracts-por/contracts/TrueCurrency.sol b/packages/contracts-por/contracts/TrueCurrency.sol
index b064f660b..c795b24f6 100644
--- a/packages/contracts-por/contracts/TrueCurrency.sol
+++ b/packages/contracts-por/contracts/TrueCurrency.sol
@@ -86,6 +86,13 @@ abstract contract TrueCurrency is BurnableTokenWithBounds {
      */
     function setBlacklisted(address account, bool _isBlacklisted) external override onlyOwner {
         require(uint256(account) >= REDEMPTION_ADDRESS_COUNT, "TrueCurrency: blacklisting of redemption address is not allowed");
+        require(isBlacklisted[account] != _isBlacklisted, "TrueCurrency: blacklisted status would not change");
+
+        if (_isBlacklisted) {
+            blacklistedAmount += _balances[account];
+        } else {
+            blacklistedAmount -= _balances[account];
+        }
         isBlacklisted[account] = _isBlacklisted;
         emit Blacklisted(account, _isBlacklisted);
     }
diff --git a/packages/contracts-por/contracts/common/ERC20.sol b/packages/contracts-por/contracts/common/ERC20.sol
index 4b52bf193..b672f9e86 100644
--- a/packages/contracts-por/contracts/common/ERC20.sol
+++ b/packages/contracts-por/contracts/common/ERC20.sol
@@ -83,7 +83,7 @@ abstract contract ERC20 is ClaimableOwnable, Context, IERC20 {
      * @dev See {IERC20-totalSupply}.
      */
     function totalSupply() public view virtual override returns (uint256) {
-        return _totalSupply;
+        return _totalSupply - blacklistedAmount;
     }
 
     /**
diff --git a/packages/contracts-por/contracts/common/ProxyStorage.sol b/packages/contracts-por/contracts/common/ProxyStorage.sol
index 5de13cd74..7503ac461 100644
--- a/packages/contracts-por/contracts/common/ProxyStorage.sol
+++ b/packages/contracts-por/contracts/common/ProxyStorage.sol
@@ -61,6 +61,9 @@ contract ProxyStorage {
     address public chainReserveFeed;
     bool public proofOfReserveEnabled;
 
+    // Blacklisted accounts are excluded from total supply until they are un-blacklisted.
+    uint256 public blacklistedAmount;
+
     /* Additionally, we have several keccak-based storage locations.
      * If you add more keccak-based storage mappings, such as mappings, you must document them here.
      * If the length of the keccak input is the same as an existing mapping, it is possible there could be a preimage collision.
diff --git a/packages/contracts-por/test/TokenController.test.ts b/packages/contracts-por/test/TokenController.test.ts
index 853205952..6a172c6cc 100644
--- a/packages/contracts-por/test/TokenController.test.ts
+++ b/packages/contracts-por/test/TokenController.test.ts
@@ -589,10 +589,21 @@ describe('TokenController', () => {
 
   describe('setBlacklisted', () => {
     it('sets blacklisted status for the account', async () => {
+      await token.connect(thirdWallet).transfer(otherWallet.address, parseEther('10'))
+
+      const initialTotalSupply = await token.totalSupply()
+
       await expect(controller.setBlacklisted(otherWallet.address, true)).to.emit(token, 'Blacklisted')
         .withArgs(otherWallet.address, true)
+
+      const reducedTotalSupply = await token.totalSupply()
+      expect(reducedTotalSupply === initialTotalSupply - await token.balanceOf(otherWallet.address))
+
       await expect(controller.setBlacklisted(otherWallet.address, false)).to.emit(token, 'Blacklisted')
         .withArgs(otherWallet.address, false)
+
+      const increasedTotalSupply = await token.totalSupply()
+      expect(increasedTotalSupply === initialTotalSupply)
     })
 
     it('rejects when called by non owner', async () => {