Ethereum OFAC compliance dips to 45% post-Merge upgrade
The historic Merge upgrade from Sept. 2022 — which marked Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) — resulted in the overall decline in compliance with standards laid down by the Office of Foreign Assets Control (OFAC).
Ethereum blocks adhering to OFAC compliance censor certain transactions, which has a negative impact on the neutrality of the Ethereum ecosystem. In early August 2022, OFAC sanctioned Tornado Cash and several Ether (ETH) addresses associated with it due to its ability to mask and anonymize transactions.
Before the Merge upgrade, Ethereum’s OFAC compliance increased exponentially as entities such as crypto exchanges opted to run censoring MEV-Boost relays on their validators. The list of top censorship offenders is populated by popular platforms such as Binance, Celsius Network, Bitfinex, Ledger Live, Huobi (HTX) and Coinbase, according to MEV Watch data.
However, the overall OFAC compliance of Ethereum blocks has declined significantly. In November 2022, 78% of the total Ethereum blocks complied with OFAC regulations. As of today, Sept. 27, Ethereum’s OFAC compliance dropped to 30%, recording an overall reduction of 57%.
Countering OFAC compliance requires operators to use relays that do not censor according to OFAC compliance requirements. There are seven major MEV-boost relays that are most commonly used: Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, BlockNative, Manifold and Eden. However, not all systems adhere to OFAC compliance, according to MEV Watch:
“Of the 7 available major relays only 3 do not censor according to OFAC compliance requirements.”
It is also important to note that not all blocks built by OFAC-compliant relays are censoring; however, all blocks built by OFAC-compliant relays will censor when non-compliant transactions are broadcast to the network.
While OFAC regulations primarily target United States-based organizations, validators outside the U.S. must consider running non-censoring relays for the benefit of the network.
Related: US Treasury sanctions Ethereum wallet tied to cartel over ‘illicit fentanyl trafficking’
Amid Ethereum’s reduced OFAC compliance, Grayscale made the decision to abandon all the rights to PoW Ethereum tokens (ETHPoW). However, the decision was attributed to a lack of liquidity in the market. According to an official announcement:
“As such, it is not possible to exercise the rights to acquire and sell the ETHPoW tokens, and on behalf of the record date shareholders, Grayscale is abandoning the rights to these assets.”
On the other hand, some cryptocurrency investment firms like ETC Group have attempted to launch dedicated EthereumPoW exchange-traded products (ETPs).
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Coinbase, Kraken, Ripple, a16z and others pressed the Senate to add explicit protections for developers and non-custodial services in the market structure bill.
Reform’s plan was meant to be detailed. Instead, there’s more confusion.
The party had grown weary of the longstanding criticism that their tough talk on immigration did not come with a full proposal for what they would do to tackle small boats if they came to power.
So, after six months of planning, yesterday they attempted to put flesh on to the bones of their flagship policy.
Politics latest: Farage rows back on pledge to deport illegal migrant women and girls
At an expensive press conference in a vast airhanger in Oxford, the headline news was clear: Reform UK would deport anyone who comes here by small boat, arresting, detaining and then deporting up to 600,000 people in the first five years of governing.
They would leave international treaties and repeal the Human Rights Act to do it
But, one day later, that policy is clear as mud when it comes to who this would apply to.
Nigel Farage launched an airport-style departures board to illustrate how many illegal migrants have arrived in the UK. Pic: PA
I asked Farage at the time of the announcement whether this would apply to women and girls – an important question – as the basis for their extreme policy seemed to hinge on the safety of women and girls in the UK.
He was unequivocal: “Yes, women and children, everybody on arrival will be detained.
“And I’ve accepted already that how we deal with children is a much more complicated and difficult issue.”
But a day later, he appeared to row back on this stance at a press conference in Scotland, saying Reform is “not even discussing women and children at this stage”.
Read more:
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He later clarified that if a single woman came by boat, then they could fall under the policy, but if “a woman comes with children, we will work out the best thing to do”.
A third clarification in the space of 24 hours on a flagship policy they worked on over six months seems like a pretty big gaffe, and it only feeds into the Labour criticism that these plans aren’t yet credible.
If they had hoped to pivot from rhetoric to rigour, this announcement showed serious pitfalls.
But party strategists probably will not be tearing out too much hair over this, with polling showing Reform UK still as the most trusted party on the issue of immigration overall.
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