I fear too much deflation is bad like inflation is so don't care much for burning. Also I see no reason the government should be trying to make current Bitcoin holders more rich, and agree or not, Americans voted Trump in on putting America first. No matter what there's a forced wealth transfer. Why do btc holders take priority? I can think of certain powerful people who'd love that as an incentive to seize more.
I agree on being cautious about incentives but tbh our leaders incentives have been towards increasing debt, and printing money. The answer I can think of is to legalize victimless crime that causes the seizures. That's a whole can of worms to talk about and could include returning btc to some unjustly seized, but wouldn't dissolve the reserve or compensate all
How exactly would they return btc to Silk Road? Many lost their btc there but what's their addresses and do the anonymous people still use those keys? SR doesn't exist.