Though its easy to see why governments would want to regulate the movement of digital currencies, the reality of doing so is much harder. A lot of wallets have no identification to them and rest on a server in a third party country. In the case of offline wallets in devices such as the Ledger Nano, theyre not connected to any network.so is it possible to regulate ?
The government of each country has no capability to regulate bitcoin or digital currencies, unless if one of the coins is centralize.
Because of decentralization that's the common reason why most of the government don't want to accept bitcoin and other digital currency.
but if one of the exchange company has been register under the agency of the government that exchange was being categorize in centralization or regulated business company, that's why they required KYC for their user clients.