So you're right, you can't pipe them out through fiber channel but you don't need to. You just need to fund them wherever you want them.
That's the thing, though. The physical location of the developers and the legal nexus of the companies are different things. Any sovereign government can exert power over the actions of companies that operate elsewhere, so long as they have anything in their own jurisdiction that can be gripped and squeezed -- a "nexus". Sometimes sovereign nations will even create laws that are "extra-territorial", laws they expect to be obeyed beyond their own borders, even if only enforceable once you are within those borders.
If all your developers live in Europe, but you sell to US companies too, guess what? The US can push you around. Do you want to do business with a bank with any US footprint whatsoever, guess what? The US can push you around. Do your executives travel to the US? Guess what? etc etc etc.
The US is not a special case here: the use of local and international legal and financial pressure to achieve policy goals outside one's own borders is common. However the US is a superpower, has far more levers to push on, far more heft to push them with and far lesser immediate consequences for doing so. The EU and China are probably its only rivals in this kind of economic realpolitik.
But if Bhutan tried to do this? We wouldn't even hear about it.
Crypto didn't die when it was export-restricted, and that stuff is really complicated.
