RESEARCH: United States MEV and Transaction Ordering Attacks

Executive Summary

MEV (Maximal Extractable Value) and transaction ordering attacks remain significant blockchain security concerns in the United States, where no federal law specifically prohibits MEV extraction but regulatory scrutiny is increasing. The SEC and CFTC have not issued formal guidance on MEV, though enforcement actions related to market manipulation may apply. No licensing regime specifically addresses MEV extraction activities, but blockchain infrastructure providers may require money transmitter licenses. The practical reality is that MEV remains a largely unregulated frontier, with protocol-level changes and countermeasures emerging from developer communities rather than regulators. No US entity has been licensed specifically for MEV-related activities.

Regulatory Framework

The Securities and Exchange Commission (SEC) (sec.gov) has jurisdiction over securities-related blockchain activities and could potentially classify certain MEV strategies as market manipulation under securities laws, but no formal guidance exists on this application. Why Campaign-Level Defense Matters in the Age of AI
The Commodity Futures Trading Commission (CFTC) (cftc.gov) oversees commodity and futures trading and may consider MEV extraction on Ethereum or other proof-of-stake networks as a form of market manipulation, though no enforcement actions have been taken specifically for MEV. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research
The Financial Crimes Enforcement Network (FinCEN) (fincen.gov) requires money services businesses to register, which may apply to MEV-related services that facilitate value transfers, though interpretation remains unclear. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York
The United States is a member of the Financial Action Task Force (FATF) and complies with FATF recommendations regarding virtual asset service providers, though MEV-specific guidance has not been issued. Why Campaign-Level Defense Matters in the Age of AI
No federal law or regulation specifically addresses MEV extraction, transaction ordering attacks, or validator ordering optimization as a distinct regulated activity. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research

Licensing Requirements

No US licensing regime specifically addresses MEV extraction, transaction ordering, or validator MEV optimization as regulated activities requiring a license. Why Campaign-Level Defense Matters in the Age of AI
Entities engaging in MEV-related activities that involve transmitting value (such as relayers or searchers moving funds) may need state-level money transmitter licenses, which typically require $50,000-$500,000 in surety bonds and capital reserves depending on the state. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research
Application processes for money transmitter licenses vary by state but typically require 6-12 months for approval, submission of business plans, background checks on principals, and regular reporting obligations. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York
No entity has been licensed specifically for MEV extraction or transaction ordering services in the United States, and no licensing pathway exists for such activities. Why Campaign-Level Defense Matters in the Age of AI

AML/KYC Requirements

Money services businesses in the US must implement Customer Due Diligence (CDD) procedures, including verifying customer identities and maintaining records of transactions. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York
Enhanced Due Diligence (EDD) is required for higher-risk customers, including those involved in cross-border transactions or from jurisdictions with weaker AML frameworks. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research
Suspicious Activity Reports (SARs) must be filed with FinCEN for any transaction exceeding $2,000 that is suspected to involve illegal funds or structuring to avoid reporting thresholds. Why Campaign-Level Defense Matters in the Age of AI
Record retention requirements mandate maintaining transaction records for five years, including beneficial ownership information for legal entity customers. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York

Enforcement Actions

The FBI arrested an Iraqi man accused of coordinating nearly 20 terrorist attacks across Europe and plotting attacks on Jewish institutions in the United States, though this case is unrelated to MEV or cryptocurrency specifically. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York
No US enforcement actions have specifically targeted MEV extraction, transaction ordering attacks, or validator ordering manipulation as standalone violations. Why Campaign-Level Defense Matters in the Age of AI
A survey found that 58% of Chief Information Security Officers would consider paying cybercriminals to end ransomware attacks, with 46% having done so previously, highlighting the broader cybersecurity enforcement challenges in the digital asset space. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research

Tax Treatment

No specific tax guidance has been issued by the IRS for MEV extraction profits, validator tips, or transaction ordering revenue as distinct categories of income. Why Campaign-Level Defense Matters in the Age of AI
General IRS guidance treats cryptocurrency as property for tax purposes, meaning MEV profits would likely be treated as ordinary income at the time of receipt, subject to capital gains treatment upon subsequent sale. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research

Key Gaps & Risks

The US lacks any regulatory framework specifically addressing MEV extraction, leaving a significant gap where sandwich attacks, front-running, and other transaction ordering manipulations occur without clear legal prohibition. Why Campaign-Level Defense Matters in the Age of AI
Businesses face legal uncertainty regarding whether MEV extraction constitutes market manipulation under securities or commodities laws, creating compliance risks. Majority of Chief Information Security Officers (CISOs) Consider Paying Cybercriminals to End Ransomware Attacks, According to New Absolute Security Research
The practical reality is that MEV remains largely unregulated, with no enforcement actions, no licensing requirements, and no tax guidance specifically addressing this activity despite its significant economic impact on DeFi markets. FBI brings Iraqi man accused of coordinating nearly 20 terror attacks in Europe to face trial in New York
Protocol-level changes like PBS (Proposer-Builder Separation) and MEV-Boost are emerging from developer communities as countermeasures, but these remain voluntary and unregulated. Why Campaign-Level Defense Matters in the Age of AI