There has not been a country that officially approved the use of bitcoin, the main factor because they are still using fiat money for all transactions. Bitcoin will never replace a fiat money because bitcoin is decentralized and could not be in control.
bitcoin for today is unstable, especially in terms of price. bitcoin is very difficult to replace fiat, because it is basically a country does require a fiat to tax thing or something. Fiat also give the state extra money, such as tax payments and others. if using bitcoin, I think, the state will not have the extra money from the public, because with bitcoin, we do not need to pay taxes.
But maybe government can allow bitcoins payment while making sure that they have a check on everyone's balance. I mean as such you can hide your cash also but the authorities find it, no ?
Similarly if bitcoins are made legal in a jurisdiction then there are not much issues, as they can still keep an eye on the people. Though a debate if fiat would ever be dominated by bitcoins let alone be replaced is completely bullshit.