Of course they are scared. One of the main pillars of any state is a single currency and full control over the money issue. Crypto destroys both of these postulates. From this all the ridiculous popts of regulation of the market will emerge.
Not only that in the past currencies needed to be backed by a certain weight of gold but that was removed long time ago thanks to both world wars, so now countries can print as much currency as they want, bitcoin not only takes away their control over the currency it takes away their ability to tax your income and even worse their ability to tax your wealth through inflation.