Bitcoins dont really exist, they aren't a row with a "uuid" that we can just say "block bitcoin X". Its a ledger so you are worth the sum of transactions on the ledger against "wallet x" at any particular time. Blocks are really just "diffs" and if you sum those diffs you get to a "balance" that the network can verify and allow you to spend.
So when you want to block "some bitcoins" you have to "follow the money", which will get you to wallet address. It's easy to block a single wallet address but the the criminals just split that one bitcoin into 10K addresses, now you have to follow that set of transactions and block 10K addresses.
The implications / problem gets worse as you consider finical crimes like in the UK, gangs will transfer £1K/£2k to some young persons bank and ask them to with draw 90% of it. Should we permanently remove a young person from the network cause of 1 mistake? Should we force them to go through the risk of setting up a new address?
Then of course the mixers / LN / complicated transaction tree's (blockchian hoping, ETC) - its a bit of nightmare.
Its not unsolvable, but I cant imagine its an easy task by any metric.
What you can do, is blacklist specific addresses, and deny receiving/sending to anything that been "in contact" with that address. But you will for sure end up blocking more than you want with this approach, although that might not be a huge issue for the ones who are trying to block things.
If you received coins from multiple transactions, those coins are not equal and retain their individual histories. To spend from an address with multiple UTXOs, you (or your wallet software) must choose which specific coins to send using coin control.
E.g, have the feds do a public list of blacklisted coin ids and simply say that accepting these coins is against whatever compliance is necessary for a business to operate crypto in the USA and Europe.
Then when some realestate agency is about to sell an apartment in Dubai for bitcoins they’re gonna be “no, not those. We can add them to our coin base” or whatever.
I get that all countries that don’t care about the black list can continue trading, but those coins still have smaller demand and thus smaller value.