I think the government is only reading the negative implications of a part of society that doesn't yet understand this technology and what is most felt is that the use of cash and its circulation is decreasing rapidly and a lot. Why is this because the creator of BTC does not want to submit to financial institutions that like policy monopolies and centralized governments that try to control all aspects of their money supply? I think they just limit the market. But, whether they like it or not, many people want to be exposed to bitcoin.
It's not like they don't know about the positivity of Bitcoin. They just pretend like there is no good or positive side to Bitcoin. But we all know why they don't want to legalize Bitcoin. They are scared of Bitcoin. They know they will lose revenue if they approve Bitcoin as legal tender. People will use Bitcoin freely and the government won't make any money from Bitcoin use.
As long as they have the authority to legalize anything and declare anything illegal. So, why miss the opportunity to make some money from people's transactions? They are unlikely to legalize Bitcoin until people pressure them about it.
The government understands bitcoin better than we do and that's why they don't want to accept it. It's naive to see them ban or dislike bitcoin, meaning they have no knowledge about it. If they don't have knowledge about it then how will they know that it will harm them more than it will benefit them? The government is not as stupid as we think, if they were stupid they would not become our leaders. Furthermore, I think they are the ones spreading negative things about bitcoin, not anyone else.