That would be an extraordinary stretch of the sanctions law, comparable to sanctioning any business that uses cash, by virtue of its effect of expanding the anonymity set that uses cash and thereby assisting sanctioned entities in concealing their transactions.

People have a right to transactional privacy (or more so, the government hasnt created any obligation against that), which most blockchains remove by default, restoring that baseline isn’t controversial. Onlookers and financial institutions cant see where you physical cash was, and they cant see your banking transactions. It requires voluntary disclosure or a subpoena.

Financial institutions operate on assumptions that a customer’s money is clean/fungible, and rely on the customer’s own admissions, except when a public ledger is involved. Simply restoring the baseline makes them not have any obligation to auto flag your transactions.

> POS that touch it

Sorry you got scammed irrecoverably. Everyone should be unlinking their transactions for a baseline of privacy.

Because of the US citizens involved, the treasury would have an issue with the sanction of an autonomous privacy vending machine, it would require Congress to pass a sanction similar to the online gambling funds ban. But here there would still likely be tricky legal issues for Congress to circumvent.