Bitcoins operate off central Banks meaning the government can not control its supply or influence its value like they do with fiat currencies. This threatens their ability to manage national income. Also since Bitcoin can be pseudonymous, the government worries that people may use it to evade taxes, launder money,Or finance illegal activities.
Why are some embracing it while others seek to regulate or restrict Bitcoin??
Really depends on the form of government in my opinion. Definitely, oppressive regime like China wanted to control their population, and so they don't want their people to used Bitcoin because they will have so much financial freedom that they don't want their people to. Look at Jack Ma, once one of the wealthiest person in the world, but when he criticized China, he suddenly disappear and we don't know what happen to him right now as it seems that he is out of the limelight as before. So just imagine that, just one person who tells a different story about China. So if Chinese people who became so rich because of Bitcoin suddenly go against the basic tenant of the Chinese government, then who knows what's going to happen to them.
There is also the capital flight, with crypto, the Chinese doesn't want their money to go out and be investment outside. And we all know that Bitcoin is borderless, (psuedo) anonymous and the Chinese people can obvious do that easy, and it might be too late before they can stop it.