Yes they could legalize it, but ,in that case, very likely Bitcon will be taxed and regulated to death anyway.
bitcoin is not the property of any government. governments can only tax their own property. that being FIAT and fossil fuels they purchase.
The gov can easily tax the use of bitcoin (transaction, the buying / selling of BTC ..). It can easily be regulated in a way that you can only legally own a known BTC account, that account could easily be taxed
your income, isn't really the gov.s property either, yet where I live it's heavily taxed, along with your savings, any money you inherent, bank transactions, ...
there's even been discussion on taxing profits you've made from the stock markerts
you seem to be under the delusion that bitcoin needs to take over and replace FIAT. bitcoin can work along side different countries FIAT. even if in the future there was just a 2% population uptake of bitcoin. this alone would be far far far higher then the numbers today and the usefulness would be soooooo much greater. it does not require 100% uptake to be mainstream.
If BTC should ever be as stable or more stable even than the $ and , is't more a question of "do current fiats still have reason to exist alongside BTC"
but, you know what my view is, governments will provide regulations that restrict the use of BTC, so that the fiat that's under their control,
can't disappear
yet again
I think it's fair to say no real answer has been given on this issue