Whether or not crypto is determined to be money or not it is still personal property which has value and can therefore be subject to taxation, anything which produces a benefit can theoretically be taxed. The important distinction after a government does deem it taxable is if crypto is a currency or a commodity as there are different rules, store of value, fungibility, unit of account and so on
But how will they levy tax on crypto currencies if they doesn't know who to tax? They can't actually tell whose using Bitcoin and whose holding them. Even if they write a law making these holders pay taxes for their cryptos, they can evade that tax whenever they wanted since they don't have a proof that they really have bitcoin.
I know not all of us would be doing that but I know that will happen if that is the case. There are a lot of taxpayers that evade taxes, how much more when if its bitcoin.
There is no clear definition of cryptocurrency even for now. Bitcoin was created few years back but it does not have the right classification of this (digital currency, asset or properties). However taxing cryptocurrency is easy for the government to implement but they too provide security for the consumers and in this case it is not possible due to scammers, hijacking and phishing sites. This is a lot of work for the government and this is the reason why cryptocurrency is not yet accepted or still in the observation period. I know that some of the government had allowed few apps or echanges to operate in their jurisdiction but only to those few crypto. This is the reason for the high transaction fee of these app that are being regulated for crypto fiat exchange because the government had tax the app or exchange to which higher fee to be deducted compared from other exchanges