If we extrapolate this to the extreme: governments can also simply state 'now all (opposed to coming from addresses a,b,c,d,e) BTC is illegal', banning anyone from trading BTC for products (buying stuff) or fiat (exchanging currency). It would be a purely legal thing, so no technological changes or advancements can prevent that.
some countries have laws where by a government cannot just make a law that causes a sector of industry loss flat out, for no good reason.. without the government compensating the businesses. for its loss of business
EG the only reason the the covid restrictions were implemented was because there was a real risk of life to people if businesses didnt go into lockdown, but businesses would be compensated.
a government cant just stop something without first weighing the risks/benefits of such actions.
take the american code 5318A(4)
(4) Process for selecting special measures.—In selecting which special measure or measures to take under this subsection, the Secretary of the Treasury—
(A) shall consult with the Chairman of the Board of Governors of the Federal Reserve System, any other appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act) [1] the Secretary of State, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the National Credit Union Administration Board, and in the sole discretion of the Secretary, such other agencies and interested parties as the Secretary may find to be appropriate; and
(B) shall consider—
(i) whether similar action has been or is being taken by other nations or multilateral groups;
(ii) whether the imposition of any particular special measure would create a significant competitive disadvantage, including any undue cost or burden associated with compliance, for financial institutions organized or licensed in the United States;
(iii) the extent to which the action or the timing of the action would have a significant adverse systemic impact on the international payment, clearance, and settlement system, or on legitimate business activities involving the particular jurisdiction, institution, class of transactions, or type of account; and
(iv) the effect of the action on United States national security and foreign policy.
and other international laws(foreign policy) where industries can sue a government
research ICSID International Centre for Settlement of Investment Disputes
so the government cant just throw any law around without showing good lawful reason for enacting a new law/policy. and if there is significant loss to the sectors being limited/halted in operation. the government could/should compensate for this.
.. its things like this that make it next to impossible for countries to say "ok by Xdate in 2023 every utility company has to go green"
and instead the government has to say by X date in 2030-2050. to mitigate potential losses due to their policy. and also offer 'grants' and rebates' for those companies that do follow policy. to mitigate any potential lawsuits