Yes. However it is just as easy for a state to pass a law containing sactioned addrrssees as it is for them to pass one containing only whitelisted addresses.

As long as we exist under the thumb of our rulers and some coins and transactions are deemed illegal these tools may help you operate in the shadows but not with legitimate and regulated businesses.

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Yes for sure, once you've passed your capital over to the "tainted" side you can't effectively go back to commerce with the regulated side in some countries but that's the individuals decision.

Ultimately we're relying on competition between nations where one sees the value attracting capital by supporting privacy

Unintended consequence of this statist intervention - not only will it drive the Bitcoin wealthy out of their jurisdiction to friendlier locations, but it will cause those afoul of their regs to hodl longer thus reducing available liquid supply putting upward pressure on price 😂