If you think govt has the power to regulate crypto currencies you miss the point
Honestly it's just dumb.
No they don't regulate crypto currencies, they regulate the damn entities using them.
For being a world of "libertarians" the crypto world is full of ignorance.
That is all.
Government can regulate cryptocurrency and is already monitoring many crypto's regularly. It's just a matter of time before we have crypto specific legislation and many states all across America are already putting legislation in place to help protect consumers. I live in WA state and crypto exchanges operating in our state have to follow the same regulations as regular money transmission businesses.
Sure, there will always be people who prefer to use untraceable and anonymous currencies (DASH, PIVX, etc). However, don't forget that crypto is not like fiat and eventually we all want to sell our crypto to enjoy the profits we have made and that's when they can get you. No matter how good you are at hiding your crypto, once you step back into fiat they can own your ass.
And why would you not want to have some regulation? Regulation is not all bad and can actually do a lot more good than harm. Without regulation we would still have acid rain and smog build up in cities from gasoline emissions, dirty factories, and polluting power plants. We would have lead and other toxins in our water. It would be legal for banks to charge you 80% interest rates, take your home for being a day late on your mortgage, and allow pedophiles to enter school's. Regulation and laws are necessary and essential for a good life. Not everything the government does is evil or meant to hurt the people it is trying to serve and protect.
I think the point is that the government has the power to regulate. Whether "they" regulate the crypto or an entity that uses crypto, in my view, that's just a matter of semantics. The question is the effect of the regulation, who is control of writing and implementing the regulation, and whether that regulation will hurt innocent people more than it helps.
Perhaps that is what 'they' mean.