I won't argue what is going to happen. I do think if bitcoin were to go this way it would lose most of its fundamental value. As border restrictions, sanctions, KYC, tracking are all applied to the institutional coin, there would be little advantage in comparison to other instruments which generate yield or are more liquid.

In such a world the demand for a truly sovereign bitcoin would still exist, although using it may be out of reach for most, depending on how things play out.

The battle is on, in terms of finding ways to scale bitcoins sovereign transaction limit, and find ways to transact that can't easily be prevented with the wave of a regulator's pen.