Bloxroute Adopts OFAC SDN List Designation
Bloxroute, a company offering relaying services for Ethereum and other networks, has announced that it will reject block bids with transactions from wallets listed on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals And Blocked Persons List (SDN List).
Based in the U.S., Bloxroute is committed to supporting Ethereum’s decentralized nature while complying with its legal jurisdiction. Previously, the company only applied OFAC rules to its regulated relay, allowing all transactions on its max profit relay.
Bloxroute emphasized that Ethereum’s decentralized and globally-distributed nature contributes to its anti-fragility and resistance to the influence of any single entity. Despite concerns about performance, Bloxroute’s two relays have maintained solid performance, participating in over 45% of the payloads in the last 24 hours.
OFAC Compliance and Blockchain Censorship
Several U.S.-based corporate validators also operate OFAC-compliant relays. These compliant blocks have accounted for 42% of the blocks produced since Ethereum’s merge, indicating a form of protocol-level censorship.
Nikita Zhavoronkov, the lead developer at Blockchair, warns that if the majority of miners become compliant, there is a high chance that they will start orphaning blocks containing sanctioned transactions. In this scenario, privacy coins like Monero may gain prominence due to their transaction fungibility and resistance to censorship by miners.
Hot Take: Balancing Compliance and Decentralization
Bloxroute’s decision to reject block bids containing transactions from sanctioned wallets demonstrates the challenges of balancing compliance with the decentralized nature of cryptocurrencies. While ensuring regulatory compliance is necessary to meet legal requirements, it raises concerns about potential protocol-level censorship and the impact on network operability. As more institutions enter the crypto space, these compliance issues may evolve and prompt discussions about the future of decentralized networks and the importance of privacy-focused cryptocurrencies.
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