Bitcoin is not fungible. Bitcoins can be distinguished by their transaction history. Governments are blacklisting addresses and all bitcoins that have passed through them are now tainted. Exchanges already reject deposits containing coins tainted by association with blacklisted individuals or even coin mixing services.
A government can scream and shout but they cannot block a bitcoin transaction.
Governments cannot block transactions but they can stop people from accepting the coins. Money that can't be spent is worthless.
I could use your argument to say U.S cash is not fungible because each bill has a serial number. And the government occasionally tracks bills with a given number.
In some highly technical way, is the medium not fungible? Sure. Just as in prison exchange of cigarettes there might be someone who won't take Parliaments and someone else who wants only Marbs. But most of the time, most people, exchanging most coin, consider them interchangable. And in any financial tool that is what matters. Not theory but how people treat it.
Bitcoins are far less fungible. If you can look at all the transactions which have occurred in the past on a given token, and retroactively decide it is unfit for exchange, this is categorically different than saying you can put a dollar bill through the washer and make it unusable.
Generally, to a percentage very close to 100%, people are not doing that.
And some circulated currency becomes more valuable because of its collectability or changes in its composite metals. But we do not say the system of currency itself has been rendered I fungible. I have ceded the technical point here several times. But for most practical purposes it is fungible because most users of bitcoin do not care which coin they get when they recieve it nor which one they lose when they recieve it.
Blacklisting bitcoins gained from mined blocks containing blacklisted addresses would easily do that.
Probably processing transactions from those addresses already is illegal with current laws. Why should you be able to earn transaction fees from that?