"Surrender to $FEDERAL_AGENCY the sum of 100,000 bitcoins or go to jail."
"No. You can't make me."
"Wow, that's certainly a retort which our legal system does not deal with several hundred thousand times a year."
"No. You can't make me."
"Wow, that's certainly a retort which our legal system does not deal with several hundred thousand times a year."
The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another.
I don't see why being "extranational" would do this, and would find this argument much more convincing by pointing to actual loopholes that this applied to.
If it does, and it becomes a problem, those loopholes will be closed.
Let's say person A registers a company in country X but live in country Y and person B also registers a company in country X, but also lives in country Y. Now person A can control the business of his company to do business with the company of person B without ever triggering a taxable event for either person A or B in country Y, until either A or B try to repatriate the money into country Y, at which time it is taxed as income.
Look at drugs, the government isn't losing much sleep over that, they just add more trials, requisites and regulations that drug companies have to jump in order to bring their products to market.
At any rate, like patio11 said it's no different than trying to trace cash only transactions. The bigger problem with Bitcoin is that since these are electronic transactions they're a bit easier to trace/log and store than those occurring in meat space, as evidenced by the NSA programs and others.