We are talking about a scenario where cryptocurrency become prominent enough that people would be trading with it. Governments and financial institutions can only control the on- and off-ramps from fiat to crypto. So now the US can claim to a quarter billion USD from North Korea [0], but what about a scenario where your assets are just numbers in a ledger that no one can control and these fiat ramps simply are irrelevant?

You want to talk about Governments trying to make it illegal? That is debatable, but a better argument. You want to make the argument that States and Institutions will create their own blockchains with backdoors so that they can override it? That is possible (or actually implemented if you look at Ripple), but that will be no real disruption of the existing global financial system.

I fail to see how "Governments will allow it as it is, but control it" is a possibility, though.

[0]: https://www.forbes.com/sites/danielcassady/2020/08/27/feds-m...