If everyone used it as a currency, then none of the arguments would stand. But when someone like me comes along, who isn't interested in day trading at all and just wants to use it as a currency, and tries to spend bitcoin with a merchant who just wants to immediately send the bitcoin I spend to an exchange and convert it to fiat, then the arguments absolutely still stand. As long as merchants, retailers, counter parties, etc., want to use centralized exchanges to convert back to fiat, then the fungibility of my coins absolutely matters. Exchanges are blacklisting some coins, and now mining pools are blacklisting some coins. BitPay already block users based on IP address and location. It's not a huge stretch of the imagination to reach the point where payment processors start blacklisting some coins too. And sure, the argument again is if everyone just accepted bitcoin themselves without centralized payment processors this wouldn't be an issue, but we both know that is never going to happen.

I don't necessarily disagree, but there is absolutely zero chance of convincing governments to stop regulating against bitcoin, stop centralized exchanges enforcing these regulations, or convince every bitcoin user in the world to move to decentralized exchanges. Our only option left is to improve the fungibility of bitcoin at a protocol level.