Sounds like you're just using an even more softened up, euphemistic expression than "red".
Whatever was wrong with calling it "black" in the first place?
Because the word "blacklist" implies that you're supposed to reject or not touch something. People dislike the idea that coins would be harder to spend, I get that (I don't want to receive unspendable coins or "hassle coins" either). So the point is, go ahead and accept marked coins. It's no big deal. Worst case, someone gets in touch and wants to ask you some questions.
I think you see that I understand the connotations of the labels, I was of course making a rhetorical point.
the public have no recourse to whatever their national regulators choose to do with it.
That's probably true in some parts of the world, but not all (there are even a couple of states in the USA that don't have any kind of licensing requirement to be a money transmitter).
But even in, say, New York, how would a regulator enforce that someone use such a list? If the assumption is we get to design the system and then they mandate it, OK, they're mandating a system we designed. And the designs I've been thinking about involve private set intersection protocols, Tor, and other things that prevent a list operator from knowing who is checking the list or whether they found a match.
So there would be no centralised way to know if someone wasn't using the system like they were supposed to, or if someone found some marked coins and didn't report them. It'd be unenforceable. A regulator/police force would have to wait until someone did report them and then work backwards finding people who should have filed some report, but it's very very likely that those people are not in New York. They could easily be not even in the USA. So that approach seems like a ton of work and it'd yield a dead end very often.
Now you can say, "well they would just insist all those things would be taken out". But again, how do they enforce that? How can they make you use one wallet app vs another? How can they even know if you have a wallet app installed on your phone or laptop? The USA doesn't have any kind of infrastructure in place to know what you've got installed on your computer (at least ... not that we know of).
What I would actually say to the (bolded) question is, why ever implement such a de-clawed system in the first place? The law enforcement agencies could well have to rely on the cooperation of huge chains of people with 2 or less degrees of knowledge of the previous holder. It wouldn't just be unenforceable, it would likely have very low success rates in returning the proceeds of a crime to the original victim. And so why? It would certainly lay the psychological groundwork with which to promote a less permissive reporting infrastructure. All to solve the old "broken" system, which was designed to work in exactly such a dysfunctional non-achieving way.
The other aspect you're forgetting is this hard limit money supply we're using, and with that model, prevention is not only better than cure, cure just creates new victims. If a culture of majority reporting did come about, then what happens to the marked money? You're assuming that all deals are conducted money-first, goods-second, but if it happens the other way round, the seller has lost possession of the goods and the buyer can distance themselves from the situation in more ways than one. You end up robbing Peter to compensate Paul, or invite an excruciatingly high premium insurance culture, and I think this world has more than enough of that culture already.
Can we not just make theft and ransom crimes, committed via technological means, less easy to commit? There's nothing wrong with that model, and it doesn't introduce this host of issues with the abuse of information systems that come with marks. I haven't even touched on the perverse incentives to mis-report, good grief that's a whole can of worms.
As we work through these questions there's always an answer of the form, "the government could do X" but each time it gets harder and takes more effort to enforce their rules, compliance goes down and the risk of constitutional/legal challenges goes up.
If you don't believe in any of those limits on government power then you might as well give up now - you believe you are living in a totalitarian state, at which point they can make you do anything and it doesn't matter what software or ideas the bitcoin community has.
This is a gross oversimplification of the situation. We are not living in totalitarian states in the Western world, but there is a very slow and gentle creep towards that scenario, you yourself acknowledge the computer surveillance aspect of it, both in general terms in this thread, and when representing your employer in your professional life. Bitcoin has always been a reaction and a tool to use as a response to this direction that Western governments are taking us in. To present the idea that either one is to believe in the absolute power of limits to state power, or not at all, is entirely fallacious.
China is seeing a huge upswing in Bitcoin right now, which benefits everyone else as well.
I would love to see Bitcoin thrive long term in China. We have to remember though that China has capital controls. They don't allow you to send more than $50,000 abroad (I think that's the limit), unless you get a special license etc etc. Obviously Bitcoin circumvents that. So this places the Chinese government in a very interesting position, because on one hand they want the dollar to become less dominant, but on the other hand they want to stop their citizens exiting their economy. We'll have to wait and see what they do. I have no idea what they regard as more important.
It seems the idea is that Bitcoin can usefully serve as a proxy currency to shield the yuan from too much external interference. Preventing any large quantity of renmimbi from being used to try and pull the Chinese State's political strings. Simultaneously, this promotes the idea of using Bitcoin for inter currency settlements, de-promotes the US dollar from it's incumbent settlement role, and promotes Bitcoin in general. Maybe that last point is too speculative, but it's certainly true that the disruptive effect of well designed and powerful decentralised information systems are a difficult problem for nation states to solve, the Chinese state are uniquely motivated to roll with the punches here, as it arguably solves more problems than it creates for them.
However, also remember that China implements widespread internet surveillance and interferes with or automatically disconnects encrypted connections. They don't need any kind of marking scheme to tightly control who uses Bitcoin for what. They have the tools they need already.
You're suggesting that the Chinese state can control the use of Bitcoin by it's citizens already, but that control can only be pretty coarse. Either you can, or you can't. I think the controls are currently set to a blanket "can".
I think you're not considering the implications in an imaginative enough way. Not every government is as liberal as the one you live under.
I know, I get that. I'm frequently appalled by some of the things some governments do (thinking of China and the US here). At the same time, this cuts both ways - people who live in Iceland or Switzerland have criminals to deal with too, but they maybe aren't quite so afraid of their governments going going full Orwell. Even if you feel it seems unstable and problematic in some parts of the world, in other parts it might be just what's needed to convince the local government to take a hands off approach, especially if their local police forces start saying "actually the community has been great to work with and we're not seeing Bitcoin get abused so much these days".
Okay, well seeing as you do get it, then I think that it shouldn't be too much of an imaginative leap to see that adding extra layers of information tracking to a system that's viability dictates a strong incentive to resist such measures is a move in the wrong direction. We should be promoting the maintained separation of transaction information from any other quality or attribute. The fact that you work for an organisation whose business model is centered around the opposite principle is not going unnoticed. The culture of your employer permeates your mindset, particularly in someone who is successful in that organisation, the two are understandably related. It might be better to think more carefully about where best to see metadata opportunities and where to let them go, you are not being paid to work on this secondary project, are you?
