The people that are currently buying some form of crypto do not even understand the basics of the technology nor the idea behind it. Banks will proceed tactically like described in your post. Another group of players will be the central banks, that will potentially not stay together with commercial financial institutions in this case. They currently do not have a direct distribution path to customers and have to rely on commercial banks to distribute money broadly. Blockchain technology could let them bypass these institution. Unfortunately this would not benefit the original decentralization idea either.
The current speculation and bubble building will harm crypto much more then legislation would ever be able to. In the long term it will survive if there are economic players using crypto for exchanging value, not solely as a store of value or even a speculative object.