I don't think the government minds alternative currencies. The possibility of easily shifting large amounts of currency anonymously, I think, is what the government has a problem with. Because green dot checks id, etc... it's not a problem. If E-gold asked for your ID, your SSN and reported things as a bank would from the beginning, I don't think e-gold would have had an insurmountable problem, either.

By "private" I meant "allows anonymous users" not "owned by someone other than the government." which is very unclear. I've been up all night working and my grammar is degraded.