He says that 'over time I think we're going to see some improvements to that".

Well, not at protocol level we're not. Only at "boilerplate" level.

I think he was uncomfortable answering that question because he basically didn't have a clue what to say (since they're isn't anything to say - as I just pointed out, 'fungibility' in bitcoin is as good as it's ever going to get at protocol level). He ends up deviating and attacking governments and blacklists instead.