Believe you me no matter how advanced bitcoin decentralisation might look or sound the government will never risk giving their citizens full control of their assets. The always want to be in charge and has long has they have this limitation of full custody stricter laws regarding Bitcoin usage might spring up. Technology is advancing
Regulating Bitcoin requires resources, and not everyone in the government thinks that it's worth it to allocate them to tighten the grip on Bitcoin. They are trying to make it the responsibility of centralized exchanges and banks, expand the existing financial monitoring rules to cover transactions linked to crypto. This is easier than creating government-owned departments of crypto monitoring and trying to go after the decentralized use of crypto, which they understand is not feasible.