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It would be difficult to enforce. I suppose they could easily ban and enforce transfers out of kyc custodians like Coinbase to non custodial addresses but not sure how they enforce a ban on self custody. Even if they knew every person that held bitcoin in self custody they would need them to turn it over willingly or search their premises.
…and arrest anyone who was unable or unwilling to surrender their private keys.
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You would have to prove they didn't lose them.
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If they do a good enough job with a propoganda campaign, they could make it so that you’re still liable unless you can prove that you sent them to a compliant custodian.
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