That is mostly correct and a big issue with crypto in its current state IMO. If government blocks your off-ramps, it's possible you could still sell via a bitcoin ATM or find someone to do an OTC trade but those are obviously not ideal.

If we are talking ETH, it's possible to use zero knowledge proofs to send money and make it impossible to trace back to the source (see https://tornado.cash/). This also has some limitations, like you wouldn't be able to tornado 8 figures worth of ETH but certainly better than an OTC deal. It's also possible that the off-ramp exchanges could block any ETH that was sent through tornado. This gets hairy pretty quickly though, as the tornado ETH could easily be wash traded or mixed. Or it could be used legitimately, swapped for stablecoins, etc.