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Having worked in a bank, even writing on bills (or altering them) takes the bill out of circulation. They just go back to the federal reserve for them to handle. But, it is illegal to change or alter money for art or jewelry, etc. It's just not enforced. A bank took 100 pennies, all the same date, and had them set into a resin square tile. They wanted to put it in the sidewalk in front of their newly built bank. That was a big no-no. They put the tile on display in the bank, and again, nope. They had to send it back to the federal reserve. Keep in mind, if the government wanted to enforce this, it's a felony. So, it's all illegal under the federal law, but it's rarely enforced.
What you have referenced here makes sense. Of course, working in a bank, they are ultra conservative. And, their rules could be as old as dirt. Either way, if I saw something made out of coins or bills and I liked it, I'd buy it. In fact, my Mom gave me a pendant that has an old Roman coin in it. Italy will have to come at me if they want it. But, I'm not giving it up willingly! :D
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