Banks are licensed/chartered by the government, and deposit guaranteed by the government up to a limit for the “faith”.
Banks work very closely with the government.
Legal framework could make or break crypto initiatives. All the government needed to do is to forbid or even outlaw the bridge between crypto and mainstream financial system. Even easier to do so under the scheme of programmable digital currency and social credit system.
Decentralized crypto will not go away, but its prominence will be dependent on if the mainstream currency succeeds or fails, like an insurance policy.
Black market use case without critical mass and network effect only goes so far.