> I really don't see how a regulatory system could be implemented
I think that may be more a failure of imagination than a likely failure of the regulatory environment.
For example, cash transactions are largely anonymous. Financial regulation seems to cope ok by focusing on the points it interacts with the rest of the financial system and controlling it in the large. I can easily imagine it doing the same with the likes of Monero if it so desired.
I could send you $10k worth of Monero today. Literally you. I won't but I could. You'd have it by this afternoon. It'd basically be you posting a public key. Safe, secure, we'd still both have plausible deniability that anything had even happened. There'd be a comment on HN, for whatever that was worth in court.
I have a hard time seeing, logistically, how I would get $10k worth of cash to you. I'd need to organise planes, couriers, figure out your address (there'd be a paper trail from that too). Assuming I was willing to cover the transport costs there'd still be quite a lot of risk at the endpoints of someone walking off with the money, and a massive paper trail/fingerprint across a couple of third parties. Probably issues at customs and it'd be a slow process.
Technically you can argue that this is the same thing, but I don't think it is. The practical differences are big.
> I think that may be more a failure of imagination than a likely failure of the regulatory environment.
Maybe. I'm quietly confident. Go in to detail here. Say, hypothetically, I just bought a house from my mate Morris for $350k and you think I also gave him an off the books $100k in Monero to avoid paying taxes. You're the regulator, what happens next? How do you police this? How do the costs of policing this compare to traditional measures?
I wouldn't think that was feasible with cash, it'd be too obvious I was gathering $100k, the risks of something happening to that cash would be too high & there'd be $100k in cash sitting around for police to find in a raid. But good luck proving that I have a secret 2nd crypto wallet. If I do, which I might not.
I think that may be more a failure of imagination than a likely failure of the regulatory environment.
For example, cash transactions are largely anonymous. Financial regulation seems to cope ok by focusing on the points it interacts with the rest of the financial system and controlling it in the large. I can easily imagine it doing the same with the likes of Monero if it so desired.