Phil Karn writes:
Recall that the US has money-laundering laws that require you to file a form every time you move $10,000 or more in or out of the country. If the First Digital Bank of Cyberspace is offshore, it could come under these laws, at least with respect to priming your account with real money.
It's an interesting question whether they could then get you for sending more than $10,000 of digital cash across the border without filing the form. It's even more interesting if you encrypt all these cross-border transactions...
This could tie a lawyer up in fits, because even if you sent digital cash across the border, you could still produce a _spendable_ copy in the originating country! In fact, you could have the same 'bill' residing on media in a dozen countries! You couldn't legally spend more than one copy of the digital cash, of course, but digital cash (unlike hard cash) can be located in several places -- and probably would be if you're talking about a substantial amount of money.
Another wonderful set of laws we can credit to the "war on drugs".
Many countries restrict or monitor the flow of currency across their border; this isn't simply a result of the WoD. However, the WoD was the main reason publicly acknowledged. Bear Giles