The optimist in me always likes to think that these laws will cause people to get their coins off exchanges, get open-source software and hardware with verifiable builds and start transacting much more amongst each other in a somewhat 'circular, Bitcoin-based economy' kind of way. If needed, P2P exchanges such as Bisq can be used as on-/off-ramps, but even if those were somehow shut down, Bitcoin mining could become more attractive again.
They say "
necessity is the mother of invention". It is very clear from bitcoin paper that there was a necessity for a payment system like Bitcoin that led to its creation.
We also saw that DEX becomes a thing whenever a big CEX starts showing problem signs (either shuts down, scams, gets hacked or forces KYC). But unfortunately something else usually comes along and puts all the effort into sleep (to some extent). For example when the existing big exchanges at the time like Bittrex and Poloniex started showing shady symptoms Bisq gained a lot of popularity then Binance came along without KYC and it gained traction while Bisq volume went down and remained unpopular (in comparison to CEX).
I believe the more they push it, in short term we could see some disturbance in the market but in the long run we will see more decentralization coming out. It also may not be a bad thing to purge some of the weak hands who were only holding bitcoin for fiat profit.
Governments trying to have full control over every aspect of everyone's life is not a new thing either. They have also been pushing for restrictions on CEX and everything else surrounding bitcoin for ever. The more popularity bitcoin gains the more alarms it will raise for those in the seat of power! But it has to be met with resistance, if everyone just rolled over we would have never had bitcoin.