I did a quick forum search about Etherium after I wrote this post and I can see that I'm not the only one with misgivings, but I'll post this anyway.

I'm new to cryptocurrency, and am certainly no programmer.

The thing I like the most about cryptocurrency is the potential for bypassing the current financial system. In my opinion, the current system is completely inadequate to serve the needs of a digital economy, and is corrupt beyond any hope for reform.

Among the new cryptocurrencies popping up, Ethereum is one that seems to be very promising. In addition to Bitcoin's block chain, it has a scripting language that allows wallets and transactions to be controlled by contracts.

This is a feature that could be very helpful if used in the right way. For example, you could theoretically set up a wallet for a kid's allowance that limits withdrawals, or specifies which addresses they may spend money at.

According to the currency's developers, the sky is pretty much the limit as far as what you can accomplish with interlocking contracts... so long as you are able to pay for the computational power needed to run the contracts.

From the Ethereum white paper:
Universality - a fundamental part of Ethereum's design philosophy is that Ethereum does not have "features". Instead, Ethereum provides an internal Turing-complete scripting language, which a programmer can use to construct any smart contract or transaction type that can be mathematically defined. Want to invent your own financial derivative? With Ethereum, you can. Want to make your own currency? Set it up as an Ethereum contract. Want to set up a full-scale Daemon or Skynet? You may need to have a few thousand interlocking contracts, and be sure to feed them generously, to do that, but nothing is stopping you with Ethereum at your fingertips.

So I don't see what would prevent the banks and regulators from using Ethereum's scripting system to build a walled garden network of approved wallets, controlled by contracts that give themselves regulatory control. These wallets would only be able to transact with other approved addresses and could also be seized or frozen by regulators.
They could then use their political clout to force the exchanges to do business only within their approved network.

It seems to me that Ethereum could easily be captured this way. At least most of the users herded back into the slaughter pen.

I don't think that most of the public would even object to it. In my bitter experience, short term self interest and convenience take a back seat to principles and freedom with the vast majority of people.

I hope that I'm wrong about this, and would love to find out why.