"it is almost impossible to trace." I always struggle with this argument. Literally every tx is on the chain. Sure, they can obfuscate and make tracing more difficult, but the data is still there to be analyzed. At some point the user will likely try to receive the crptyo and cash out at an exchange, or purchase goods and services through a regulated entity like paypal. That's where the gov can scrutinize and take action, which is why KYC is in place at Coinbase and other US exchanges.

To curb nefarious use across borders, seems like the problem may be that more exchanges need KYC laws across the globe, not just in USA, and there would need to be some interpol-like oversight.

A globally public ledger seems like a tool, not a hindrance, against "Black Money". We just need more global cooperation and oversight between governments tracking the exchanges.

If you use a bitcoin mixer then it cannot be traced. That's the whole point of mixers.

Bitcoin is not only possible to trace, it is arguably becoming easier to trace than things like cash. In addition it has started to degrade in some of its decrentalizing aspects which opens up lots of vulnerabilities to being subverted by the government. One example is the supply chain of mining.

Illegal transactions are a much greater problem in fiat currencies.

What if the government shut down all exchanges? So then you have people transacting OTC?

I don’t get it. Then there’s no price discovery and nobody wants to take a risk.