If that would be the case I am sure many users would wake up to massive tax burdens and would either need to sell to cover it and may temporarily suppress price and even discourage non-custodial holdings.

As for those who believe in it, they'll move to P2P markets if they don't do it already or move to countries that don't have laws like this

Yes it could be a problem now, but in future if we have payjoins, coinswaps and stealth addresses and submarine swaps between liquid and lightning become the norm, tracking a coinjoined UXTO becomes way harder