IS BITCOIN REALLY FUNGIBLE?

Few days ago while I was going through an interesting discussion on a group for Blockchain solution in Africa (Cryptogene), the argument was “Is Bitcoin really fungible?” and why do many people not talk about it? Seeing it’s very important for adoption and negligence may lead to Centralization (Government thinking of controlling 51% hashrates in order to regulate Bitcoin)

These were the points raised by the Initiator;

1] Government(s) allows BTC payments everywhere. 

2] All store's and ATM's accept BTC as payment. 

3] Government(s) creates a white listed group of addresses which you are allowed to use and pay with. 

4] ATM's and other stores will reject all payments that are not on the white list. This effectively allows the government to "freeze" certain addresses. 

5] To get a white listed address you have to apply for it with the government and give up all your personal info. This address will then be linked to your name/personal data. 

6] If large amounts of BTC flow into your address you will be put on a blacklist and the IRS will conduct an investigation from where that money came from. If valid it will be put back on the white list else you will be questioned. 

7] The government will have access to your private key since they will issue you a personal address; this means they can seize the "illegal" BTC that flowed into your address. 

8] Crypto is now regularized just the same way as fiat is (fiat has certain money IDs blacklisted) but less securely since once your funds are stolen they are gone.    

Additional Issues: 

-It is also possible with BTC to trace where your money you received came from, if it is a blacklisted address your account will be blacklisted until you explain where the BTC came from or until you forfeit your BTC. 

*Possible solution: -Could be solved by having a private/anonymous blockchain, not sure if such a thing will ever be adapted but it is a good step to stop the governments of tracing the payments and asking questions.   

Possible continuation of the FED: - All BTC that is seized will be send to the federal BTC reserve. This reserve will determine the price of BTC by either selling said BTC at discounted prices to certain companies at an interest rate. (Same thing as the FED) 

*Possible solution: None that I can think of really.   

CONCLUSION As long as BTC addresses stay the same the government can still track the money coming in and out of white listed addresses. They just will not know where it came from. If weird things happen they can freeze/black list that address. They can even require you to fill out a form where 95% of your BTC came from. If you do not, you can be fined each day until you do it. Meanwhile your funds will be frozen. It seems like that we forgot the government cannot control crypto but they can control the trade of BTC to possessions. I hope a crypto coin fixes all these issues, but even if such a thing is done the government might only recognize blockchains that have public blockchains with fixed addresses.   

"Should Bitcoin be completely anonymous?"     

What do you think?