Whether BTC becomes a problem is a question, but if use in laundering or escaping taxes gets past a certain point, I do think it is a risk.
Incorrect, the government has no concerns over undermining the local currency. The primary purpose of banking regulations is population control, it has nothing to do with currency perservation
Know your Customer laws, book keeping regulations, etc are all about control and intelligence. If they can get this intel and allow BTC to operate as is they will leave it alone, if however they can not get the intel they need on how money is moving well you can bet your life they will crack down hard
Governments, all governments even yours, are about Power, Control, and Authority not what people seem to naively think that the government is there to "help" or "protect" or any other just altruistic goals.
The road to hell is paved with good intentions, and the most terrifying phrase in the English language is "We must do _____ for the greater good"
Government is not reason, it is not eloquence,it is force! Like fire, it is a dangerous servant, and a fearful master; never for a moment should it be left to irresponsible action.
Going back to the monolith question, the other day someone at the public utility helped me fix a mistake with my bill. That individual was not irrelevant to my experience with government power.
Take for instance the following response to the Ray Dillinger’s email:
Internet also became a disaster. We're very far from original ideas: Uncensored, decentralized ideals are forgotten.
I remember, in the beginning, governments were really afraid of people's reactions, even to make small regulations. Today, we don't even discuss before accepting any regulation about Internet. Infrastructure is almost completely controlled/owned by governments or cartels. [1]
That is so far beyond reality that it’s hard to believe this person was there “at the beginning”. The Internet, after all, started as a DARPA project...
1. https://www.metzdowd.com/pipermail/cryptography/2020-Decembe...
There's not much reason for any government to want to crack down on BTC simply for the sake of cracking down on it. People talk about governments cracking down on BTC because it will undermine the local currency or banking system but I think that's mostly paranoia, there's not much of any evidence to substantiate the hypothesis that any government is fearful of cryptocurrencies.
There were some governments and regulatory agencies that were concerned that BTC is a scam, or needs to be subject to security regulations, and had legitimate concerns about it but for the most part governments don't care that much about BTC in terms of a danger or a threat to their legitimacy.