However, a far larger portion of illicit drug transactions are for cash dollars than for bitcoin; estimates are 2-5% illicit transactions globally in fiat currencies, and about 0.34% illicit in bitcoin in 2020 (a rate that's fallen significantly since 2019 as we see more mainstream early adoption if bitcoin [1].

This proposed regulation doesn't address the problems you evoke, and its an attack on fundamental human rights such as privacy.

[1] https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal...