The Federation’s position on genetic engineering is not well considered
Because old cultural taboos are not rational. Think of how for almost every animal species on earth there is a culture that labels it a delicacy and another culture that declares it impure and inedible.
Star Trek celebrates the diversity of humanity. The extremes of genetic engineering and (on the other side of the spectrum, perhaps) the Borg are symbolic of the corruption of that diversity.
For an in-universe explanation, I suppose you could just look at the degree to which cybernetics are tolerated. Rutherford-level cybernetics? No problem! Borg Queen-level cybernetics? Helm, warp nine, full reverse!
The Bynar are very tied in like the borg but it is all willing and for the most part they retain individuality at least down to the couples level.
Only reason the Borge are hated is the forced joining that removes individuality. The federation likely has no issue with the whole cyborg part.
I would argue the bynars are not doing it voluntarily either though. According to phlox in ENT, right after birth a surgeon removes a certain part of the newborn‘s brain, replacing and connecting it with their central computer.
And I would argue a literal newborn cannot give consent to this. The only difference to the Borg appears to be the larger degree of individuality, though that seems questionable too, considering how interlinked they are in the TNG episode.
Because Earth never faced an extinction-level Cyborg War, pretty much. I’m of the opinion that the primary reason for the Federation’s ban on genetic engineering is Earth’s enduring trauma from the Eugenics War.
Eugenics is a major part of that trauma, being part of the war. But banning all forms of genetic engineering across the entire multi-species alliance for centuries because it can go too far is a vast overreaction. Imagine if the nuclear reactors had been completely banned because of WWII, or if viral research was banned because of COVID, or if prosthetic limbs were banned because of Wolf 359.
You’re saying that banning eugenics is an overreaction to the eugenics war? Because there’s no evidence that genetic modification was banned in general.