The policy is that once UTXOs have been spent, we cannot reverse those transactions in the blockchain itself due to its immutable nature. When I mentioned reversing UTXOs that went through mixers, it was about tracking and potentially recovering those funds, not reversing the transaction in the traditional sense. The focus is on tracing where the funds have gone and working with exchanges or wallets to recover them, rather than altering the blockchain record.
How is potentially recovering the transaction any different from a reversal?
The concept of reversal has to do with double spending which involves you having to cancel transaction from your wallet by using a higher fee to initiate the process of double spending right before any confirmation. Having to talk about reversal being of any difference doesn’t apply. That’s because, once the confirmation states, it’s considered authentic and now belongs with the new owner.
It should be known that, having most of these vulnerabilities at the exchange level means, you deal with it using the exchange in question support system to flag this transactions once notified. When it comes to non custodian wallet, vulnerability can only arise as a result of your carefreeness. The decentralized nature of Bitcoin is what makes it Bitcoin.
Should there be any protocol to falling and potentially cancellation and recovery of a transaction, I think this would mean badly for the network with users being more carefree and banking on that for a double thought or not having to properly review address before initiating a transaction. It’s wouldn’t do much good in this regard.