Sorry, when I said "our system" I meant the banking system, which you're right is not our system, but a government entity or any modern business would not have an issue with it at all.

Here's something to consider. Why do we have a merkle tree secured by hash cash? One of the reasons is so that there is no transaction reversibility. If a government database (or more likely an exchange or other custodian database) is the transaction state, is the authority on whether a tx gets reversed or not, (their signature is required afterall), and your custodian trusts this other custodian not to sign a second tx made by you (as they all do these days), your custodian (which I say custodian because this is a 2 of 2 multi-sig and you don't have enough signatures to spend and you don't have unilateral exit) could sign the unconfirmed on the utxo to allow you to spend it elsewhere.

Here's this put in more simple terms how I could put it on my own.

"What Is A Child Transaction In The Bitcoin Network? A child transaction can be best understood in relation to its parent transaction. In the Bitcoin network, transactions are linked together in a chain-like structure called a blockchain. When a parent transaction occurs, it creates an unspent output that can be used as an input for subsequent transactions.

These subsequent transactions that spend these unspent outputs are referred to as child transactions."

So, when you receive a tx that is only signed by one signature, your wallet will query the government's node, see the tx in their custom mempool, and it will say its confirmed. Still in the mempool, the wallet will say its confirmed. Its not possible to reverse this tx, because the government mempool won't allow it to be replaced and because it doesn't have the governments signature, its not consensus valid to be mined yet.

(In both a CTV perpetual KYC scheme and this multi-sig perpetual KYC scheme, you'd need a wallet that even complies with this scheme)

You may remember me saying that.

So then your wallet would sign the child transaction of that tx and so and and so forth until the government signer wakes up and signs all of them at once and broadcasts that to be mined.

(p.s. I had to double check with some people I know that you could sign a child transaction of a multi-sig utxo before its parent is fully signed lol)