Sure, but 99% of people will sell, and the price will crash.

The people that need it won't sell. Bitcoin is most useful in countries already living under authoritarian rule with no access to traditional banking.

Almost none of bitcoins usage is by the people that need it.

What makes you say this? Nigeria, a country with a currency that loses purchasing parity power every year, has the highest per capita usage of Bitcoin in the world.

Sounds like the people that need it ARE using it...

Are you suggesting that most Bitcoin users live in Nigeria (or a place like it)?

No?

I'm saying that Nigeria has per capita the largest Bitcoin using population on Earth compared to other countries, which is a counterpoint to the argument that people that need it (escaping local currency controls + inflation) are not using it. I am arguing that people that need it ARE using it.

That is a point in favor of this particular policy idea, though, isn't it?

How so?

If one of the biggest upsides to crypto is that it can be used as an end-run around authoritarian regimes, then a policy proposal that doesn't hurt this while curtailing some of the bigger downsides gets some points in its favor.