They don't need the ability to regulate bitcoin. They can just treat illegal exchanges as money launderers (or terrorism funders, or whatever else the go-to argument is today) and slap them with hefty fines. Anyone using these exchanges is committing a crime and can be treated accordingly.

Anyone caught with large amounts of crypto can be treated as a criminal, the same way people who have large amounts of cash on them are treated. It's obviously harder to spot someone walking around with a hoard of crypto coins, no black briefcase required.

This is just another tool in an already very expansive toolbox. All in the name of "security".

There's no need to put scare quotes around security. Cryptocurrencies are mostly used for one of three things.

1. Paying ransomware. 2. Buying drugs. 3. Day-trading.

That's it. There's no meaningful slice of the pie that goes to #4.

Almost all of us can agree that #1 is illegal, many people and countries currently believe that #2 is illegal, and almost all of us can agree that people participating in #3 should probably pay taxes on their gains/get tax credits on their losses.

#4 is, or has been, evading laws in China and other countries with tight currency controls. A wealthy Chinese citizen can't necessarily just transfer money to a foreign bank account. But he can purchase crypto mining hardware and electricity for local currency, then sell the resulting coins for convertible hard currency on foreign exchanges.

That's a fair point, that I forgot about.

#4 is "holding currency independent of any central bank's monetary policy."

Ironically, that's the strongest long term feature. But probably the one driving the least amount of volume (outside of hyperinflation states).

But the idea of it being a "currency" requires it to have some value outside of it being stored (IE someone wants to buy it).

If the only reason for it existing is to show how many you have, it has zero value outside the possible curiosity of "Having the largest number that happens to match this set of arbitrary mathematical restrictions"

Storing value and being freely transferrable is an intrinsic value. That establishes some worth > 0.

What external transaction use does is even out the day to day value changes and decrease volitility (transaction volume >> trading volume).

Without that, you'd see some value placed on it, but a large price moves as trading affects it. Come to think of it, that looks a lot like... hmm.

Why do you think this is true? I use crypto weekly here in Switzerland because it's comfortable, fast and has lower fees. I could even pay my taxes in some places. Then there are millions of people with no proper access to banking that highly benefit from crypto. But some people just think it's all about illegal things and trading.

You forgot outright money laundering / tax evasion

They have the same ability to regulate it as they do cash transactions. Which is to say, people will still find workarounds if they really want to take a shot at it, but forget about transacting with legit companies and institutions unless you want the spotlight shone on you.

Adding 1 additional p2p hop to transactions is trivially easy with Bitcoin and readily automatable. With 1 additional hop, you facilitate somebody's purchase of bitcoin and they pay for the services you need in fiat (usually at a discount). Good luck regulating that.

Who's going to exchange euro for crypto, if all European banks are prohibited from touching it?

People can just buy what they want with crypto instead of exchanging it for euro or dollar.

Maybe for virtual items but how would physical items work? The baker has the same issue as you and the flower costs Euros even though the baker might except crypto.

I can figure some complex ways but somewhere, because there are not enough people using crypto, it will get exchanged and there you will be caught. In this scenario you are actually doing something illegal; spending money you did not declare to the gov for KYC/AML, so you can still be traced via the baker who exchanged your payment to euros. And if you used Monero or whatever, you are now an actual criminal trying to hide their tracks.

There would need to be a very large crowd accepting crypto for the crypto sake, not for the USD value to get anywhere here. Which is the dream of all the fans but this is not even close where crypto is currently and most govs are taking steps to prevent it getting there.

Gift cards are anonymous bridges between the fiat and crypto world. Anyone can buy a $1000 Amazon gift card or 1000+ other gift cards instantly with no KYC.

Currently, buying gift cards using the lightning network is faster than buying gift cards directly from merchants and there is no way Amazon or any other merchant can win the speed race using the traditional financial network.

Unh hunh. Minus the US and China, who also have strong incentives for banning anonymous transactions.

How much of world GDP does that leave?

Any government can't regulate Bitcoin per se, but they can always regulate the intersection of their currency and Bitcoin. If they require banks to observe a whitelist of acceptable exchanges when honoring transfer requests, the banks will happily comply.

They can't regulate bitcoin but they sure can discourage investors from putting in billions into Bitcoin. Considering that the growth story is based around those future investors it would be pretty bad news for Bitcoin if that flow of investors suddenly stopped.

Serious question: Couldn't they ban ISPs from connecting to known networks? A public blockchain must remain public and they can largely prevent that. They could (not saying they will) ban VPN connections to other countries.

You don't need to connect to a blockchain to make a transaction. You just need to connect to someone who is connected to a blockchain. Big difference.

Blockchain isn't where the concern is. It's where the exchanges interact with the banking system.

The EU can't tell each country's ISPs what to ban or not. That is a matter for each country.