The US gov't already colludes with big tech and ISPs to monitor and collect all electronic comms, and censor. Anyone that becomes a problem for them is targeted for exhile and deleted, if necessay.
AI increases their capabilities.
Gov't could expand this system to screen for bitcoin-related traffic and ISPs could shut it down in real time.
Smart people will find creative solutions. But, it'll probably be too complicated for the masses.
Gov't doesn't need to compete. They have a monopoly on force, and they are master manipulators. They can nudge us (the masses) in the direction of their choosing.
If they capitulate, it'll probably be for show, another manipulation. "You can have Bitcoin, but only KYC and through programmable institutions that can debank anyone."
What we have going for us, now, is we are ahead of the game. Congress is slow to understand new tech and react. But, it is on their radar, now.
Mass adoption is critical to resistance, so that everyday people say "Hey, I use Bitcoin. My savings are in there. If you mess with that, your political career is over."
I love self-sovereignty tech. I'm all in on building communities that allow us to opt out. If that ever starts to catch on, the Gov't will fight hard.