In what way do cryptocurrencies coexist with banks? These are completely different systems, and nor they can, nor should coexist.
Cryptocurrencies can and, in fact, are functioning without governmental regulations in many countries, while still remaining at the status of legal (check wiki list for crypto legality by countries), only few impose bans or taxes.
They only impose taxes at exchanges not really on crypto itself because of it decentralized being, and government function was only to regulate the incoming and outgoing transactions of fiat currency. They can't took control everything in cryptocurrency, because it was separated from the state governance, but if it talks about fiat they're always dominant on that.