If we look at original idea proposed by Satoshi which is P2P electronic cash transfer, the idea eliminates the need of middle men (i.e. the banks) to transfer funds between two entities. The government legislation's are putting the middle men back in place and that destroys the idea proposed by Satoshi. The government approved cryptos are CBDC, which they can control.

We need to understand that decentralised Bitcoin has it's own use cases and is not designed for governments to use as central currency.