How government agents should hunt us in the sandbox

The fops will find us by watching unusual actions by card ID.  These card IDs interface at a point to  smart contracts, and the shoe leather snoops can snap the rel photo of crime.
Then, with probable cause, they can issue warrants for any trade with a thumbprint match that matches the criminal exchange.  In other words, they can work back by card ID, hunting the physical card by uncovering a trail of matching card IDs.  Just like real accounting, each card ID in the sandbox hedging one of the account entries. Government accounting bots, and the python folks who write them will make zillions, hunting down tax revenue.

Government transaction costs  will be priced in the  pits, regulated pits will not work as expected..  The sandbox eventually builds an implicit gain and loss for government, they end up in a narrow lane of smart contracts, insured against, hired out by tax agents, and isolated. A private sector tax hedge industry, largely counter spies working against government,plotting, cheating.

 Government should stay out of the pits. If I were an advocate of government monopoly, I might insist on the 'warrant' clause in the smart cards, they must recognize and obey an adjudicated seizure of property,. the judge has a hidden seizure key.  But I recommend against it.  Government should get a warrant to force the human to fingerprint, and the human should physically refuse, have a fight about it.  Leave the card out of the discussion.

The other argument

A legl warrant to seize moneys is generally observed today, the legal sheriff can take a pile of green, cout outhis share, and leave the rest. Why should pure cash lose that property? Afterall, if itcan reoresent its own bankrupty, it can obey a warrant.

That is thecatch, the card will obey its own bankruptcy, and operate an absolute red/green investing imit.  But, warants, associated with card IDs get noticed, the card cannot prevent that, and government agents free to publish.  So, the card with outstanding warrants finds it impossible to trade within the users/green range.  The pit would have its own credit quality service, one tht tracks judiial warrant,.

Bankruptcy is enough, no need for special government warrant or tax code.