Nothing is ever perfect. It doesn’t mean you shouldn’t at least try to track down criminals. Which has essentially been the West’s response to ransomware so far.
The problem is that to kill ransomware, we would need a near-perfect system, and that is extremely unlikely, or thee will be substantial leakage, and continued profit for ransomers. I'd say it'd be easier to entirely shut down crypto globally than to ransomware-proof existing crypto.
Probably means that the real solution will be to do both. Sanction only fully traceable cryptocurrencies and shut down the rest.
Focusing on controlling onramps and offramps to cryptocurrency, like controlling goods import/export, is a relatively straightforward compromise to this internal dilemma and allows the government to be a player in the space without much direct oversight, even if some folks are slipping through the cracks. A sloppy, haphazard enforcement is likely to prevail.
And there's another way to reassert state control within that framework. If the bad cryptocriminals come for your stuff, the government can bail you out - if you play by their rules. The loss compensation mechanism is a simple plan to mitigate dangers, since it's easy for governments to create and redistribute credit internally and doing so can build consent.
Submitting to this framework does mean that the government is truly in competition with decentralisation to provide a better, more trustworthy service to handle central credit, and has to massively step up security efforts in the process. Everyone started "asleep at the wheel" on this, with individual tech firms all building out their own insecure house-of-cards fiefdoms and relying on the intellectual property law framework to keep them up. But everyone knows it's flawed - of course you can copy, what's important is if you can get credit, and that part is also changing with the crypto sector - assignment of credit is the whole thing of NFTs in a nutshell. The nation that can grasp this the quickest and turn it into a coherent part of their economic framework will cruise ahead.
Will any substantial number of govts have the foresight to setup such a system of on/offramp controls + rules/bailout + investigation and enforcement soon enough?
If the ransomeware plague stays in the non-critical commercial realm, it would work
The key looming problem I see is that it is already sanctioned by criminal adversary nation-states, and there will be a lot of profit temptation to go after critical or military infrastructure - some ransomware gangs are just going to be that short term 'smart' long-term stupid. A sufficiently serious enough attack could cause war-level damage...