Banning bicoin, issues

Mish giving a warning Shot on bitcoin 

This is precisely one of the things I have warned about on numerous occasions.
If and when central banks crack down on digital currencies it will be lights out.
People keep asking me what can central banks do. The question should not come up as the answer is obvious: ban transactions in Bitcoin.
If the US banned bitcoin transactions, people would still have their digital coins, but they would effectively be worthless. One could not buy anything with bitcoin other than barter transactions. There would be no way to get money in or out, at least in the US.

The central banks banning exchanges from having all access to Swift is not enough. Exchanges can move fiat accounts in a trusted transaction.  If I buy bitcoin from a counter party it is a credit card purchase for me and a merchant deposit for the counter party, and the exchange is the mediator, or simply a money transfer manager across independent accounts. The exchange need not have its own swift account.

So the exchange need never talk to a Swift bank, although many, if not most, likely use an intermediate Swift account to hold funds. But they do not need to if the the user can trust the exchange. In open banking system, a direct bank to bank Swift transfer may never know a third party is managing.

The central banks can slow the transfer way down by requiring biometrics on each account transfer across Swift banks. In his case the exchange needs an intermediate account, making the biometric independent of the bitcoin trade. Then, of course, we have over the counter trades but the central banks can also require biometrics on the cash swap and slow things way down.

These are painful trade offs for the central bank. The block chain is the smallest part of bitcoin, the block chain is surrounded by all the normal credit card digital transactions happening in the crypto exchanges.   Policing that becomes increasingly difficult as normal fiat banking, via fintech, is streamlining fiat digital liquidity. The central bank ends up acting like a forensic cop rather than a regulator since exchanges are not regulated swift banks.