Well, the reality is that it's not easy to track these things. And there's already plenty of privacy tools that allow for privacy in transactions. Even Ethereum didn't blacklist OFAC censored addresses at the protocol level. And then more privacy tools will be created on Bitcoin L2 and side chains like Lightning, Taproot, Liquid, etc.
I believe this is a very positive thing because it'll bring USD stability to many more people.
In the worst of scenarios we might end up with black market USD and clear market USD.
Either way I think that's beneficial for economic stability of billions of people.