Pretty much. Bitcoin wasn't made for anonymity. The logical approach to handling this is that exchanges consider coins from those wallets as invalid, creating a secondary class of coins.

And assuming all tumbled coins were tainted? Perhaps you could, but then I can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same. If you could get a big fraction of all the active coins/wallets to be "tainted" then people are much less likely to refuse to transact with them.

> can imagine tumblers paying "innocent" people (out-of-band) to tumble their coins, while charging money launderers to do the same

Perhaps. But the legal precedent is for laundered money to be tainted per se. The laundering itself taints the cash independent of any preceding criminality.

Yes, but then you have a problem of "tainted" bitcoins. So in theory you arrive in a situation where some bitcoins aren't equal others - they can't be spent in a normal way because at some point in the past they went through a tumbler, so payment providers won't touch them "just in case".

Yes, that's kind of the whole point - from the government or law enforcement perspective, having a class of "tainted" coins would not be a problem but the intended outcome, and if a side-effect of that is a serious disincentive to use tumbling/laundering services (since that would effectively taint/destroy your funds, no matter if they were originally clean), that would be considered as a bonus, not as a flaw.