The government just wants to take advantage of the ever-increasing prices of crypto on the market. They see a huge opportunity to increase their income by collecting taxes from their citizens. Some countries have gone far by implementing a high tax percentage on crypto income. South Korea is a good example of this. As long as crypto is taxed fairly, there should be nothing to worry about. Otherwise, crypto's adoption in the mainstream world will diminish by a large margin. The fact that transparent cryptocurrencies like Bitcoin and Ethereum are easily taxable, has paved the way for mainstream exchanges to adopt them at a large scale. Privacy coins, on the other hand, are in big trouble as the list of exchanges de-listing them is growing over time. What can't be taxed, will quickly see disapproval from governments worldwide. This means that as long as privacy coins are nearly impossible to enforce taxation, transparent cryptocurrencies will gain all the attention in the mainstream world.

In the end, people will decide whenever they'd want to pay taxes from their crypto income or avoid using it altogether. I think that more people will avoid using crypto as governments become strict in their tax collecting practices. Not all governments will be this way though, which means that crypto will still experience growth in mainstream adoption albeit at a slow and steady phase than usual. Just my thoughts