Regulations are only possible because the technology to "transfer dollars electronically", as you say, requires lots of infrastructure and trust - the entire banking system, basically. If I want to send you a dollar electronically, I can't do so without using the banks. And the banks are both intrinsically and extrinsically motivated to impose regulations, which they can do by limiting access to their transfer-money services.

But access to the technology to transfer bitcoin does not require infrastructure and trust. I can send you a bitcoin without needing a bank or any other large authority. Moreover, I can do so relatively anonymously, and from anywhere in the world. It is therefore much, much harder to impose restrictions on moving bitcoin than moving USD or other non-digital currencies, because there are no large authorities capable of enforcing those restrictions.

(That is, the government can of course pass laws saying I can't send you bitcoin, or limiting the circumstances in which I could. But the most they can do is punish me if they can catch me - they can't actually stop it. Whereas banks do have the power to actually stop me from sending you USD. [Unless I want to do so physically, which is hard to do in quantity or over any distance.])

The appeal of bitcoin in this respect is that it disrupts the idea of money "being" in a certain place and thus having to "move" across borders. As a worldwide distributed ledger, it's unclear that sending someone bitcoins amounts to a value transfer across borders.

I don't see this as a loophole so much as radical redefinition of what a store of value means. It's clear that whatever future regulations look like, they can't mirror the status quo.

Not really a ledger, bitcoin is only an asset, never a liability.

Point taken, but I think that a long list of all accounts and their balances is essentially a ledger even if those balances are constrained to be positive.

A ledger is almost certainly a better model for thinking about the blockchain than, say, a bunch of people with cash under their mattress.

You could argue MtGox have a liability of quite a few bitcoins.

While regulation will always play a role in this, I would hesitate to say that this is "the" difficulty. Transferring dollars (say) electronically is complicated because you need to prove that no dollars are being created or destroyed. Though you could phrase this as a regulatory rule, it's really more of an accounting requirement.

The system as it stands (FedWire/CHIPS/SWIFT, and ACH on a consumer level) is very complex and tries to strike a balance between reasonable clearing times and limiting trust of individual actors.

The difficulties in an electronic money transfer system for fiat currency are, in my option, primarily technical and logistic, with the logistic aspect being maintaining the correspondence between specie and electronic balances.

That said, it's always hard to analyze success. Arguably, bitcoin does not solve the money transfer problem any better than previous schemes, like Chaum blind signatures or egold. The contribution of bitcoin to the electronic payment space is a little more nuanced than just "easy money transfers".

> Does bitcoin only offer a "reset" button for regulation?

Even if that was the case, that would already be pretty awesome.

Really? Which regulations in particular do you feel it would be awesome to do without (apart from KYC/AML)?