I think the government does not like cryptocurrency confidentiality. That is why most countries do not want to accept cryptocurrency at the government level.
With the governments, the issue with cryptocurrency is not about confidentiality but anonymity. The governments claim crypto activities is anonymous and unregulated but it is quite clear that the governments are only afraid of the power of decentralization which gives the power back to the people. Decentralization which is fully practiced by the crypto space do no give the governments the absolute power over the finances of the people and this is one of the main reasons why most of the governments are reluctant to accept cryptocurrency.