The real threat is that the security guarantees for the distributed consensus on the blockchain history make economic assumptions which don't apply to sovereign actors. If the US decides to assemble enough ASICs to construct bitcoin double spends, it can just do it. If China decides to expropriate the mining hardware in its jurisdiction and use it to construct double spends, it can just do it.

Investing in cryptocurrency is like trading the national currency of a very promising but poorly defended young nation. There's a lot of money to be made, but the bottom will fall out if they're invaded.

Take Monero for example, the potential privacy coin, some people think that it will be next Coinbase currrency (I think this is a pump though as they grasp onto any hints like it's solid) and that they will fully satisfy regulator requirement by Monero Coinbase users withdrawing to their own Monero wallet and providing Coinbase the viewing key so Coinbase can say to regulator it went from JohnB to JohnB. I have a hard time believing this will last long and I doubt Coinbase do to, regulations are a moving target and loopholes will get closed fast or at least eventually.

Drop fiat at the edge though and then it's a different game, but what do people start from? mining? mechnical turk tasks? some global airdrop for every human on the planet - is this was even remotely possible that would be interesting.

It makes me kind if sad. If/when btc crashes it's people like this who are going to get hurt.

A big tax for converting Bitcoin to real currency could cause that bitcoin would be used as a currency. If it's too expensive to convert my BTC, I would just use them to pay/buy things. I agree, that playing the "Money Laundering" or "Terrorism" card would be an effective option for the govt.