1. I guess most would choose this option. Like look at everyone right now. Most of them invest to make profit. They all eventually sell their coins and enjoys their profit in "fiat" currencies. And we already see a lot of people using centralized exchanges or wallets. Their coins can be seized anytime. So those people won't actually notice any difference, other than some "extra" paperwork (which I also think will automatically be done by the exchanges/wallets). A quick 1000x profit for them.
2. No action taken against individual involved with bitcoin? No AML, KYC or taxes? This option will be taken by those that are actually involved in illegals stuffs. For them, the value of bitcoin won't matter. So if the price is $30,000 they are fine with it. Taxes wouldn't be a problem for someone who chooses the first problem. So like I said, most likely this option will be preferred by criminals.
For those who have invested in Bitcoin and either have no profit, or are making losses, or have very little profit, they will not be happy with option 2, since for them their investment will forever remain empty. And the truth is that there are very few people who really care about their privacy, those who think about the consequences. Almost every newcomer who comes to crypto must undergo verification when registering on the exchange, and almost everyone does this without any fear.