Actually, I commented on it myself upthread. A large amount of transparency reduces the anonymity set and thus reduces fungibility.
Coins must be cryptographically identical to be fungible. Otherwise you will eventually run into issues where coins
without some degree of taint could be considered suspicious. Here's the quote:
[snip]
You can't have fungibility and transparency at the same time. Sorry. All units have to be cryptographically indistinguishable, and having a large amount of transparency in the ledger only serves to reduce the anonymity set (and reduce the fungibility as a result).