The exchanges are the interface between cryptocurrencies and users. If the government regulates the exchanges, then the government will be able to control every facet of the crypto world. They have a competing product called fiat money.
What do you mean by this? That if governments control exchanges, they can ultimately control bitcoin as well? If that's what you meant, then I don't really agree with it. It's true that the easiest way to buy bitcoin right now is through exchanges, but as regulation gets done, and adoption occurs, then I'm sure that there will be plenty of other ways to purchase and use it. Also, once people buy BTC, they can transfer it to a wallet, there they own their PK and do whatever they want with it. If people end up storing BTC this way, governments can't really do anything about it.
Of course that right now, governments could at least track the coins, and know what people are doing with their coins, but once LN gets ready for use, even this will be impossible to do. I think regulation is a good thing, and I'm not really afraid of it right now. Also I agree with what has been said in the article. Once BTC gets regulated, real investor will probably start buying it for real.
