Another thing is countries like El Salvador, which recognize it as a currency, and I imagine that citizens do not have to account to the IRS for every transaction they make.
And why would foreign country residents have to report their earnings to the IRS (a
USA institution) in the first place? Those procedures don't apply to them at all. But this argument is just a minor formality as the apropriate tax institution for X country could be substituted instead.
Ultimately, the only way a country can go about preventing the use of cryptocurrencies as payment methods is if the respective government explicitly goes out of their way to see to that e.g. Turkey. It is not going to happen just by some increased oversight laws.