Unfortunately with governments it's no longer about what makes sense but about what they can get away with. Much like you can expect a giant for-profit business to do anything to maximize its profit, one can expect a government to do what it can to maximise its control. That's just an observation.

Regulating cryptocurrencies can have the same effectiveness that regulating information exchange through the internet had. Yeah sure it can be a bit impractical or scary for most to go around artificial limitations imposed by their state but it is practically impossible to keep the really motivated from doing what they want.