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Actually they do understand, and it just happened to be that it goes against them. Imagine that you're governing a lot of people and your people would use something that is under your radar/observation. Pretty much you would think that they are doing something against you.

The part that they don't understand is that people need the privacy in their own money, not to be regulated by someone that is at risk of being taken away from them.

agree, leader will stroke people who follow their rule. when people dont follow it, they have some option like ban what people hold.
but its hard to give privacy up to people, because control is the best part of leadership, to give higher convenience to do what they want

The government must of course be able to control the transactions that occur in their country, if they can't control it like cryptocurrencies it will have a big impact on the country's economy, there will always be speculators who continue to create chaos in the country's economy so that what the government does by not accepting crypto is the right thing.

Not because there are some meaning the whole market will suffer , remember that the cryptocurrency has the goods and bad side and people needs to decide for this and not the government .
why will they hinder the advantage of accepting crypto when there are only few who hinders this? that is not fair in all aspect.
they must do their job finding the irregularities but never let all the people suffers from that. i am lucky that my country stands neutral towards crypto and i think this is much better than all of the hard headed country to continuously deny this fact from their people.