You're thinking about this from a technology point of view, but not from a practical point of view. All you need to do is make it illegal to convert bitcoin to

You're thinking about this from a technology point of view, but not from a practical point of view. All you need to do is make it illegal to convert bitcoin to fiat and vice versa. Bitcoin is used for speculation, and not as a currency. Having bitcoin without being able to use it is pointless, and the only way to use it right now is to convert it into a usable currency. Yes, people can use some shady offshore exchange, and risk major KYC issues with moving that fiat. The key point here is that very few people would do so. The price of bitcoin would crash, and that alone would stop being from wanting to buy it.