I have some ETH. You are right, it's a fundamental failure if they are censoring anything, but this is a further issue if they are burning ETH with every transaction since there will be further ETH that is banned or blocked.
As for how it will affect the value of ETH, it won't IMHO. Banks or governments can cut you off any time, and this doesn't stop anyone from keeping their money in a bank. Most transactions are legitimate and won't get censored. I think ETH will be billed as a 'green' cryptocurrency and go up in value.
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