In April 2018 the G20 will meet and discuss regulation of cryptocurrencies.
Among several measures, they’ll probably force Exchanges to share clients data, just like the Korean government did recently.
More generally, there will be a regulatory push to reduce anonymity and privacy in the crypto environment, and increase obligations of information sharing.
I’ve read on Trustnodes that Ethereum was planning to increase privacy during the year 2018.
In my opinion it would be safer to delay this implementation until the crypto regulatory framework is well known.
A privacy option facilitates illegal activities, and several “privacy” cryptocurrencies are already monitored by authorities.
For example, an interesting article : “Bitcoin is being dropped by criminals in favour of privacy coins like monero” : https://www.independent.co.uk/news/business/analysis-and-features/bitcoin-latest-updates-price-privacy-coins-cryptocurrency-monero-digital-currency-price-a8137901.html
People responsible for “privacy coins” may face lawsuits in the future.
So it would be safer to keep a fully public, transparent and traceable Ethereum ledger. It enables Ethereum to stay neutral and not facilitate any hidden activities.
The traceability of transactions is also increasing responsibility and accountability of users, so it’s pretty positive in my opinion. It also increases the quality and reputability of the investment.
Regarding Plasma chains and other implementations, It would be careful to make sure transactions are also fully traceable.
There is no doubt some users will create ERC tokens some authorities will want to monitor.
It is true that Ethereum Foundation is in Switzerland, which is a country very favorable to privacy, but this is not an absolute protection. For example, Credit Suisse and UBS had to pay large penalties in 2014 despite they are located in Switzerland :