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.
Oh you sweet summer child, tax agencies and financial investigators know the ins and outs about financial triangulations since the dawn of tax fraud. You think they're not going to ask you about it once you're on the spotlight for an audit?
How would anyone know that you are in fact transacting BTC at all (especially if it's anonymized)? The risk seems almost nonexistent unless you are buying really expensive services on a regular basis.
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.
What reality are you living in? Gift card purchases are _extremely_ scrutinized for fraud and everyone and their mother is skeptical of large purchases for gift cards precisely because they're an extremely common vehicle for fraud.
There is a massive BTC to gift card market and I've heard zero problems from the regular users of such services. What additional scrutiny have you heard of relating to $100-$1000 gift cards that are purchased legally and traded p2p?
From my understanding p2p exchange is the whole purpose of gift cards, so this activity is indistinguishable from other mainstream uses.
