Why does the history matter? We all receive cash that has been used to buy or sell cocaine, we know it. So what? For once more, coin history a privacy problem, not a fungibility.
Let’s say you want to buy some bitcoins but you can’t buy it from an exchange for some reason and I happen to own some coins on sale. So are you telling me, it wouldn’t make any difference to you if I wanted to sell you some coins with very bad history? (Maybe Isis used my coins to fund their operations or I got my coins from an exchange hack and I am that hacker) I want to sell you my coins directly, without using any third party exchange/mixer. Would you take this deal?
According to your logic, you should.
If you say “no”, now you see why it matters.
In that case I think it's fair to do some tracing and return them to the owner...
Drugs don't bother me that much TBH, but stealing someone's BTC is another thing.
Another possible scenario I can think of:
https://www.nasdaq.com/articles/house-sold-in-portugal-for-3-bitcoin-in-countrys-first-ever-direct-transaction
Let's say that you spent 3 BTC to buy a house...
What happens if the new BTC owner decides to deposit them to a CEX for instant fiat liquidation?
Most people will argue "hodl, don't sell for fiat", but personally I consider it a miracle for a no-coiner to accept BTC as a currency. Hodling/studying 4-year cycles takes another whole level of effort/discipline, so you cannot expect that from everyone.
What if that 3 BTC is deemed to be "tainted"?
Because, you know, when you buy a house, the state knows who you are, it's not an anonymous transaction for some weed, so prepare yourself for some trouble if even a single satoshi is deemed "tainted"...
