One idea could be to make a system that allows anonymous transactions but can still track illegal activity. Blockchain technology can make a public ledger of transactions that we can trace back to the source. That way, we can stop criminals from using Bitcoin to do shady things.
The blockchain technology has always been a public ledger that is open for anyone that is looking, and many people use centralized exchanges for their trading, which requires them to submit compulsory kyc, so many people who use BTC have lost their privacy because of that, and many addresses can be traced to real identities. Though criminals are very smart and they make sure they keep their identity secret by not using platforms that farm data. As long as there is a currency, it must be used by criminals, there is no way to stop criminals from using BTC, and that is surely not the concern of BTC developers.
Another thought is to make some rules about Bitcoin and crime. We could make Bitcoin businesses put in measures like KYC and AML to make sure only the good guys are using the platform. To make Bitcoin "safer," we gotta find a balance between privacy and security. It's not easy, but it's gotta be done if we want Bitcoin to be a real currency.
Most crypto businesses have KYC and AML policies, because without it you cannot operate in many jurisdictions, but that was not a rule implemented by the BTC community, it is government policy. BTC is a censorship resistant and permissionless currency, there is no way to do what you are suggesting without breaking what BTC stands for.