In my view, money is a technology, meaning that a money system does not have an inherent purpose, but is designed to serve specific purposes. For instance I think that the US money system is "designed" to serve as a medium of exchange, a temporary store of value, and a tool of government economic policy.
Bitcoin might have been designed with some other purposes in mind. It could also be co-opted by a government. For instance, I suspect that subsidized energy for bitcoin mining represents a government monetary policy, but I don't know the extent of the influence or its real purpose.
Moreover, like a technology, people will use money if it's useful to them. For instance people in countries with "bad" money will often use it for daily expenses, but move the bulk of their assets into instruments based on the currencies of the US, Europe, etc.
I’m far from an expert in these things, but to me the benefits of bitcoin are: 1) giving individuals a way to exchange money digitally without it being tied to their offline identity directly (cash) and 2) providing a currency that can’t be manipulated directly by government monetary policy. I assume banning it and replacing it with something from the government is intended to avoid those things intentionally, and isn’t some accident they stumbled into.
Indeed, I'd separate the two policies. On the one hand, providing a digital currency that works like their existing money system, is just an extension of their existing policy, perhaps a minor technological upgrade.
