I am a strong believer in the right to privacy (even if some people take it what I believe to be too far), and a centralized mixer has the potential to enhance privacy. Also, however, mixers have the potential to give nothing more than the illusion of privacy and highlight your transactions to governments and other nosy people.
I agree. Anyone who uses a mixer should consider that they might be a honeypot. And that's why it makes little sense for a real criminal to put these services above Monero and coinjoins, which are trustless.
Sure, if mixers can be the cause to shut this place down, no matter how sad it might be, forbid them. It just makes little sense from a government's perspective. If I was a government official, I would want such services to run, because they would be central point of failures that I can go after. Forbidding them would push everyone (especially criminals) to decentralized, trustless solutions which I cannot control.
Most people use mixers to have any reasonable privacy before making a payment. It's crazy that the government puts everyone in some sort of "potential terrorist list" for using a mixer. If you get paid from an ad campaign and want to buy some stuff or pay someone, it's not a big deal to anyone reasonable, but now im not sure if it's worth the risk of cashing out any payments. Who knows what could happen. I think cashing out any coins that weren't bought in Coinbase or other KYC exchange will be a risk by default since they threat people like they are from Hamas if you didn't buy them on their favorite exchange basically. The government should understand that Bitcoin has no privacy at all unless mix the coins before a payment. If you pay someone, they can look up your address and see your entire BTC networth easily, so mixing it before sending a payment is only reasonable. Unless someone fights this politically and explains them how this works things will only get worse.