I don't buy that it has to be just one or the other. Fundamentally, crypto is just very dense information and once it became widely enough standardized by people who could easily share and apply it commercially, getting even the strongest crypto to the most basic user becomes extremely easy.
Short of blocking the very essence of digital data spread and transactions, the three-letter agencies and the giant governments behind them realized that there was no way to effectively put that particular genie back in the bottle without fucking over too many other extremely well-connected commercial interests.
Thus, while they didn't entirely give up on their bullshit, and keep looking to find arguments for privacy subversion, they realized that roundabout methods were a usable practical course.
That's where we stand today: a world in which there's no obvious way to block something that's so cheaply easy to share and securely be applied by so many people, but governed by technocrats who do what they can to subvert meanwhile.
The fundamental math of crypto is secure, regardless of any conspiracy theories. AES-256, for example, can't just be broken by some secret Area 51 alien decoder ring. The mathematics of good modern crypto simply crush any human computing technology for breaking them regardless of budget. However, the agencies also know that in a complex world of half-assed civilian security and public habits, they still have enough methods to work with without delving into political firestorms.