> The minute they try to impose those controls on crypto is the ultimate Streisand Effect moment that will confirm to everyone that they definitely need this asset.

I'm not convinced. Your scenario relies on people having some deep conviction about the value and usefulness of cryptocurrencies. I think that this is true only for a very small vocal minority of users/buyers. Most people just want to make easy money with it - that's why I think heavy regulation/bans will simply crash the prices instead of leading to a Streisand effect.

No, they just have to have more faith in it than than other assets. Which becomes easier when states make moves indicating they have lost control.

I think they avoided it because they were asleep at the wheel when it started getting traction and now limiting it would make a lot of people angry. It's a mess of epic proportions. It's probably the best strategy for regulators to wait for some major collapse (like Tether being exposed as a scam) and use that to introduce counter measures. Meanwhile the negative sum arm race continues sucking more people in.

The Indian government is going to ban it entirely. I'm unconvinced that many Indian investors will want to hold on to an asset which can land them in jail.