It means, that the government believes the benefits gained from this technology.
With their action, they are indirectly showing to its constituents that they trust crypto.
Which will then give a positive mindset towards crypto and so it will create more demand of usage.
I consider it as an opportunity to widen the usage of crypto and not a threat.
People later on will see the difference between a decentralized vs centralized coin.
So it will be their choice which one they will use when that time comes.
This is an extrem example but fairly possible. It would be easier for governments to print money and with that they could easily destroy the economy.