And yes while there plenty of precautions one can take to avoid a scenario like this how, how practical would that be to do for an everyday user who simply wants to buy a cup of coffee
It's probably worth pointing out that the entities freezing accounts or seizing coins are, to date, only centralized exchanges and centralized payment processors. I have spent bitcoin directly from mixers and from coinjoins at countless websites and physical merchants, and never once encountered a problem with where my coins came from or even been asked the question.
In terms of the "cup of coffee" scenario, then long term this is likely a payment which would be being made over Lightning as opposed to on the main chain. Onion routing would solve this problem completely, as the merchant wouldn't even know the source of the coins, let alone whether or not they are tainted.
target wallets containing more then a certain threshold of tainted coins.
Provided you have not handed out your xpub or linked your addresses together in the same transactions, then it is impossible to even tell which two addresses belong to the same wallet.
But history is on our side here, with governments time and time again trying to curtail a popular technology only to inevitably fail with massive blow-back.
Bitcoin is designed to be censorship resistant. They can blacklist as many different addresses or UTXOs as they like. Nothing can stop people from trading peer to peer.