FicCEN is acting ultra vires when they take it upon themselvs to re-define what a database is. In both Linden's and Bitcoin's cases we are talking about databases, and not "virtual currencies" and that is the absolute fact of the matter. insertfunnyname.wordpress.com/2013/05/07/lin…
If FinCEN decided to publish a decree that a human being is a fish, that would not make it true. This is exactly what they are doing with databases; they are saying databases used in a particular way fall under their jurisdiction. It is an indefensible position.
Eventually someone is going to challenge this in a court, and they will win. Even if they don't win, the unconstitutional FinCEN will not survive hyperbitcoinization. Then there is the rest of the world to consider, where FinCEN doesn't have jurisdiction. This is all temporary.
What cannot be replaced or repaired is the damage this will do to the American economy. Now every game maker has to register their game with FinCEN if they use a model where people can buy in game goods that can be traded. Clearly this is totally absurd, and can't go on forever.