1. The government does not want to shut down bitcoin I don't know where you got that from. They approved 11 Bitcoin ETF's a couple days ago.
2. Yes, you can buy on a KYC exchange and then transfer the funds to an address that the government cannot link you to. Use the bitcoin address of any non-custodial wallet of your choice. You will not get taxed until you move it from that Non-KYC wallet back to an exchange to sell. That's the best way to go about it in your situation. Reporting anything stolen won't help you.
can the government shut down bitcoin if want? it's not possible because bitcoin is not controlled by any government or organization.
if government imposed tax on bitcoin earnings that is fine but it sounds really ridiculous if it's taxed because of holding bitcoin.
dex is the best solution in this situation, you can buy coins and to sell your coins just use p2p feature, government can not trace your wallet.