> I don’t think there is much they can do, except shut down companies like coinbase.

This is exactly what they would do. They would make it illegal to operate an exchange and go after foreign exchanges with threats against the banks that serviced them. At some you need to get your money into the banking system as government backed currency for it to be generally useful, and they could at least force that to be a multi-step, onerous, and less anonymous process (eg get crypto --> buy physical goods with crypto from the few people that accept cryto for payment --> sell physical goods to get actual money).