I have wondered if they could block all encrypted traffic unless specifically authenticated by E-ID or something similar, in a future dystopian scenario. I doubt it, since I haven't seen anyone talk about it, but it would be great if someone who knows a lot about networks and the internet could explain why it would be impossible in that case.

The reason I wonder this is the weird and dystopian laws that are being proposed here in the EU, and in the US, UK, etc. The one here in the EU (Chat Control) would require surveillance and age verification (i.e. identification of users) for pretty much any service that can be used for communication. As the internet is today, such a law would be pretty much impossible to enforce.