If crypto does gain massive adoption and you are able to pay for things in crypto, there would be less of a reason for people to cash out into fiat. How would government collect taxes from crypto gains then? Also, if something like ETH becomes big, how is the government gonna stop people from making pyramids, ponzis, and scams in general?
I agree with you that there will be less and less reasons for cashing out into fiat, especially within next bull market which should give more adoption than last one.
I think that government should educate peoples through educating system, to educate people how to avoid scams.