It is good to see the company admitting that it had joined the race to the bottom, though the cynic in me points out that they wouldn't be doing so if they were winning the race (Temu and other recent upstarts are doing rather well there).

Etsy loosened rules that limited generic sales in order to gain growth, and where the rules still have restrictions (i.e. the use of external delivery, including drop-shipping, are permitted as long as you designed the item), those restrictions are a mix of difficult to enforce (i.e. takes man-power to police) and easy to work around (drop-shipped product has a custom logo on the box, does that count if the logo is your design?).