That's why it's crucial to have at least one bitcoin-friendly country, in which you can safely exchange coins to fiat. Otherwise the whole concept of blockchain and decentralisation becomes obsolete.
No, it's the reliance on centralized entities for exchanges that becomes obsolete. If you engage in peer-to-peer exchanges, utilizing platforms like Bisq or reputation-based systems that enable direct communication and transactions between people, there's little room for government intervention. The problem comes when you transact with entities like Binance, Coinbase, etc. that are required to follow regulations.