A conscious society worthy of the name would flourish both on a transparent as well as a private standard. Since the world is not perfect and never will be, we will have to live with degrees of freedom. In the past (tribal society) everything was public, besides thoughts. Most of societies advances including ever more sophisticated rug pulls and countermeasures are based on privacy advancements. Societies will thrive where privacy is a guaranteed default for individuals while trusted groups can openly share all information between each other for a social relationship net.

I understand that transparency is a necessary property for a first mover in a new space like this. beyond the regulation aspect, user simply wouldn't trust it as a store of value. but it harms users if they misunderstand and think that it's actually fungible.

If you make something and sell it for bitcoin do you care about the UTXO history? What do you specifically care about or what in its history would make you reject the trade?