Has nothing to do with decentralized wallets, even though they may be included in the writeup, unless they are designed through open community consensus to automatically refuse serving certain addresses. There is no way to directly impose centralized rules on coins controlled by their holders/owners. . They will likely be doing that on exchanges/wallets they control (which will be centralized) so that tainted coins that go through them are affected
Non-custodial or decentralized wallets do not control your coins, you control them. You only use the wallets to mostly view, send or receive bitcoins. Centralized powers have no such authority, control or power over bitcoins controlled by their holders/owners, because they go against multiple principles/rules of the Bitcoin system, such as decentralization of power, trustlessness, transparency, censorship resistant, privacy, etc. These principles are supreme and can't be violated, but they can ofcourse do that on exchanges they control on tagged tainted coins passing through them.
The Bitcoin community should as well be tagging and blacklisting tainted coins, but in transparent and trustless manner. Holders of such coins should always be given opportunity to prove their innocence. We can't behave like the centralized and opaque powers who always seem desperate and don't care much about people being innocent.
* A coin becomes tainted when it's acquired or earned through immoral means. This should be the focus of the blacklisters, whether humans or AI, and they should be open to checks and balances so that this is not abused.