There is seemingly a growing desire by government to regulate cryptocurrency. It was once believed that bitcoin was anonymous and can't be traced. This isn't quite true since various techniques have been formulated to trace the transactions and discover the owner. Secondly,
This is not true. It was never impossible to trace a Bitcoin transaction, the technology that Bitcoin runs on is transparent and another misconception i want to correct is that Bitcoin isn't anonymous, but pseudo-anomymous, that's it's possible to track/trace the transactions and know the wallets addresses that sends as well as receives, but can't know the individuals behind those addresses, unless they give up their identities through third party services like centralized exchanges etc; having said that, there are also services such as mixers and coinjoin, that makes it impossible to trace a Bitcoin transaction.
What are your thoughts on these regulations? Do you think it defeats the purpose of bitcoin's creation?
Most centralized exchanges have always required their users to undergo compulsory KYC before they can trade on their platform, it's not really new and its up to you to protect your identity by choosing the service you use. As far as stricter regulations are concerned, I don't think the government can go farther than using centralized exchanges to trap people, that's why users who value their privacy choose P2p trade and wallets that they are in control of the seed phrase and private keys.