Because transactions are recorded in a public blockchain, couldn't that be a big downside for anyone accepting bitcoin whether or not the coins appear on a blacklist/warning list. If a sending wallet address is associated with some contested activity (e.g. someone getting sued, or indited), I could imagine that those BTC could easily get swept up in the legal actions to unwind or resolve the activity.
This vs accepting cash which is fungible, and would need some other evidence associating the buyers money with the contested activity. At least the resolution activity there would likely be stopped at one level from receiving the cash, but with BTC, you happen to be able to track that one specific coin right through multiple layers of transactions. I can see lawyers tracking all the way out to the current holder of a given BTC.
edit: Upon a bit more side reading, I think the tracability of a given BTC is a bit overstated here.
This vs accepting cash which is fungible, and would need some other evidence associating the buyers money with the contested activity. At least the resolution activity there would likely be stopped at one level from receiving the cash, but with BTC, you happen to be able to track that one specific coin right through multiple layers of transactions. I can see lawyers tracking all the way out to the current holder of a given BTC.
edit: Upon a bit more side reading, I think the tracability of a given BTC is a bit overstated here.