Also since Bitcoin can be pseudonymous, the government worries that people may use it to evade taxes, launder money,Or finance illegal activities.
Just like Cash!
But yea some governments are fearful that by letting Bitcoin be "legal" in terms
of useage it would mean that their citizens would never use the national FIAT
ever again. Also some governments are over controlling of their citizens.
I think its nonsense to think this way. Businesses are not going to drop operating
in FIAT for example.