This also "dooms" large investors who hold huge capital gains when holding stocks from decades ago. If it were to include mutual fund company or large institutional banks (IB). If a fund, brokerage or trading house is required to FIFO their trades, it changes the landscapes of mutual fund managers dealing with managing of their holdings. Forcing FIFO is an attempt to get "the most" taxes out of a sale of assets in an up-market since you would expect older holdings to have larger capital gains than newer holdings.
Now, how about cost-basis adjustment for those who pass away. That was a big point in some of the Obama-era tax changes which Republicans wanted to be kept in at that time. This may not be known to everyone here but it is when you have transfer of an estate to a beneficiary - this adjustment updates the cost-basis to the date of death of that person. This "wipes out" possibly huge unrealized capital gains and thus "tax revenues". While this is only part of the estate planning business it may be targeted for tax changes that can "get more tax revenue" for governments.
Rossi: Death and taxes - Understanding how 'step-up in basis' works
So, if individual investors are forced to FIFO, they may hold shorter term and trade more often - possibly shedding more tax revenues and cutting peoples' desires to "invest for the long-term". Unless you invest for your next generation and expect cost-basis adjustment to handle the tax shelter. They either want us to trade-em-up or not-die to get the revenues "they are owed". No wonder people take their money off-shore.