Governments can pass a law enacting all the citizens to update their bitcoin address to the existing identification medium so that governments can trace the transactions.Governments can decentralise the infrastructure by franchising the process just like issuing licences to private banks.
I think Many government organizations see bitcoin as the first means of deceiving people and ways to break the country's economy because many people might prefer to invest in cryptocurrency rather than creating job opportunities in a country that will cause citizen unemployment and crime to be far more
The only thing I thought would make the government legalize Bitcoin was when it was centralized which I believed would not happen.