It's considered property in the US. And the rights to own are protected by the constitution.
As long as western governments don't go on a crusade, cryptocurrencies will continue to thrive.
You don't have a constitutional right to own absolutely anything, though. If you buy grenades, for instance, the state will seize them and imprison you. Someone already mentioned Executive Order 6102, regarding gold.
Slowing the spread of a virus and dictating what people can trade with is an apples to orange comparison. This is not a good rebuttal.
I could buy a Tesla with Bitcoin, but what good is that if I have to pay capital gains tax for "selling" the Bitcoin even though I didn't actually sell it, I used it?
You would (almost) never pay cap gains on cash even if the law required it, because cash goes down in value over time. Everyone knows this, so no one holds cash, they buy stocks, bonds and realestate. When it comes time for the Tesla, they have to sell those assets, pay cap gains, then buy it, just like BTC. If you wanted to avoid cap gains, your only choice is to hold cash, in which case you would have less overall money at the end.
tl;dr: all appreciating assets are encumbered with cap gains, the only way to avoid it is to buy non-appreciating assets, which is worse