The problem with cryptos with public balances is that attackers can know your net worth in advance, and thus know whether you're a valuable target, and exactly how much they can ask of you. And this is the reason why privacy technology likely won't be outlawed: high networth individuals use them constantly.
Not really... a mugger can read people well enough to know that they have more than $100. More than $1000, etc. A random person older than 30 can likely give you a lot more than $2000 even.
So this goes back to wallets needing to be smarter all around. I expect there to be companies/services that spring up specifically around this need.
However, one thing that I predict in the next 5 years is that people will simply stop having crypto wallets on their phones. They will either not have mobile access to their savings accounts at all or they will use something like a SatsCard that only has like $100 on it https://getsatscard.com/
In many countries, kidnapping and torturing someone for $2000 is not worth the risk for anyone. But for amounts 6 figure and up, it makes good risk-adjusted sense to many people.
Given how few people have a proper security setup, cryptocurrencies with KYC'd accounts and public balances are lists of juicy extortion targets.
Until wallets gets smarter and safer, and these smart/safe features are so mainstream that even muggers understand it, this will always be a risk