Is it possible to “untaint” crypto by unmixing it? Suppose that I receive a payment in ckBTC/icBTC/enter your favourite cryptocurrency here, and I trace its origins and find that 20% of it is blood money, by some definition. Is there any reason in principle why it should not be possible to take this pink money and split it so that 20% is deemed to be the bright red part corresponding to that original blood money, and 80% is clean as the driven snow?
If that is possible, I believe that the picture of how “tainting” works could get a whole lot more interesting, as there could be multiple different definitions of tainted that could interact with each other. E.g. an eco-warrior might say that as far as they are concerned, any funds that have come from fossil fuel profits are tainted. Another person might be a law abiding US citizen and so funds from Iran, North Korea and Russia might be no-no. For these two people to transact with each other, a payment system would have to seamlessly determine which funds are clean according to both of those definitions and transact only in that. Untainting would be a way of not having dozens of different wallets. If Mr America wants to buy something from Mr Eco-warrior, the payment would have to be eco-clean, so overall the funds left in Mr America’s wallet would probably be eco-dirtier and the funds in eco-warrior’s wallet would become more legal in the US.
I say, this could be fun.