A group of government agencies, law enforcement, and academic researchers have all partnered on a new digital currency surveillance project backed by over $5 million dollars from the European Union. The project, dubbed TITANIUM (as mentioned above), will be conducted over the next 3 years.
They still haven't learnt anything about the law of unintended consequences...
They think they are gaining back some ground. But what they are really doing is spending $5M of public money to help promote a wider use of ring signatures and zSnarks in the crypto community. If they try hard enough, we may even make a major breakthrough in homomorphic encryption!
This is true, they'll evolve the space. They would be better off not announcing what they intend to do because people can see it and develop new tech.
That said it is not an option to do nothing.