Can't anyone basically sanction entire wallets, and mark them, and make some legislation that any transaction involving coins originating from those wallets be rejected by all payment processors and exchanges in regulated markets?

I mean, they obviously can, but probably they have elected not to do so. But if crypto becomes a tool in the hands of enemy nation states, such regulation can't be soo far off.

Though that would create a secondary market for these 'tainted' coins, and would probably have far-reaching consequences into the crypto ecosystem.