Tax evasion rarely works out long term.

I think the people in the panama papers would disagree.

Yup. Remember, it wasn't the police who got Capone, it was the IRS.

So the IRS is going to put the same amount of resources into each of the new mini - Capones as they did Capone?

That is literally the IRS's job. IRS funding at the margin directly increases or decreases tax revenues, because they have more or less resources to spend pursuing tax evasion.

Luckily the IRS has been kneecapped by Congress because they started looking into the finances of some sketchy looking conservative nonprofits.

http://www.cnn.com/2014/07/18/politics/irs-scandal-fast-fact...

Well if they contract out the chain analytics work to the most connected firms, I wouldn't be surprised if we found out that russian hackers are the ones behind helping americans launder their bitcoins/ether…

Maybe Equifax has some engineers working on this right now for them!

Capone's transactions were not recorded on a globally distributed immutable ledger.

Ahh yes, with a 100% provable 1-to-1 mapping to all US citizen illegal transactions.

The trend is towards KYC compliance and automatic sharing with tax authorities. I assume after a while very few countries will tolerate exchanges not complying.

...and what exactly will they do about it? The question is about decentralized exchanges. Countries may choose not to "tolerate" whatever they wish, but the internet is under no compulsion to tolerate shortsighted countries.

They can prosecute the operators of those sites, not like it didn't happen in the internet before. Usually some things survive, but at the cost of extra hurdles (e.g. only accessible via tor, but even there, some people got busted through bad opsec).

You mean the operators of web front-ends which provide access to the exchange? I suppose that's possible. But I don't know how long that will even be the main way that people access them.

Exactly — dapps are unstoppable, at least with any conventional approaches to internet censorship

If China's firewall can't stop it, nothing will

Regulate that ISPs block the protocols.

They would need to regulate every ISP in the country to block the protocols, and then go after every website just using those protocols under the hood (and most of these would not be in the USA).

I can't see that ever happening especially because these protocols would have non currency uses as well.

Regulate people using handcranks to power portable transmitters transmitting information at variable frequencies to be received and picked up by those who know of beamforming and antenna design.

Honestly, that sounds like a dream scenario for creation of a new, better, fully distributed internet. This is my favorite timeline.

Including the OpenVPN, HTTPS, SSH, and TOR protocols? (All of which could trivially be used to circumvent such a block.)

ISPs would have to block all crytocurrencies for that to work.

That would work, I guess, but that is a huge step to make and governments aren't currently talking about how they plan in banning all of Bitcoin.