no. this is quite bullish for bitcoin. they're showing that bitcoin can't be used for criminal activity, whatever the government decides that should be (usually in favor of the general public). this helps to legitimize bitcoin. Protecting consumers of bitcoin is bullish for bitcoin. helping to prevent fraud in bitcoin is also bullish for bitcoin. All these things increase confidence in bitcoin as a legitimate way of storing wealth.
It sounds like all the good things for bitcoin here are coming from the power of the central authority to provide confidence, legitimacy, protection, and legal recourse.
So why on earth is that a good thing for an asset which is all about the power of decentralized systems?
Human society, for a number of years now, has been governed by central authorities that define the rules in which society has to live. Bitcoin cannot and does not take part in dictating how society is to function, Bitcoin is put forward as an alternative currency that cannot be quantitavely eased / printed and gifted to society's largest entities as reward for criminal behaviours that endangered the very society that the central authorities are meant to be acting in protection of.
Central authority is a basic requirement of society. Bitcoin is an alternative currency. Recognition by the central authority of society is a legitimisation of Bitcoin in its position as an alternative currency.
I don't (sort of I do actually) understand Bitcoin being seen as a replacement for all centralisation / government. Bitcoin has never attempted to make legislation. Currency only (and that's shrunk to 'store of value').
People get way too hung up on the concept of "hard" currency. It really takes some study of economic and financial history to understand that currency is just a means to an end, and that hoping for some immutable piece of value in your personal vault isn't what powers our world. Money is far more abstract than anything in the crypto world, and that's why it's not a good long-term bet.
I'd encourage you to read an excellent primer on the subject: The Ascent of Money by Niall Ferguson. Money is a social construct, not anything tangible. You can create money from leaves you rake in your yard, and organize your neighborhood around how many leaves you have. You can all agree that the giant stone at the bottom of the bay belongs to the unfortunate sailor who lost it, and therefore he's still wealthy even though he can't get his giant stone back (true story). You can agree that the people who are oldest in society deserve the most access to credit, and give them services accordingly.
Basic point here is that wealth is derived from society creating connections and performing services for each other, not from holding currency. Currency is simply the oil in the machinery which helps facilitate these connections. It has no intrinsic value, and the easier it flows, the faster the engine can run. That's why the Fed conducts QE and money printing - it's about the economy, not the currency. Inflation is a side-effect but it's often preferable to loss of real assets and jobs and lives.
You're describing credit, not currency. You can access credit to fund daily transactions without touching the principle of your investments. That's what a credit card does.
the power of "decentralized system" in this case is merely from the fact that more of it can't be created. When we're talking about the big movers, the institutional investors and the big money, they didn't run to bitcoin because it was cool tech, or cool to be decentralized. they're investing in bitcoin not because of bitcoin. they're investing in bitcoin because central governments have defaulted on their obligation of having a stable currency. You can't hold fiat currencies when they're loosing value at 6% to 12% or more per year, it's just too costly.
Bonds and cash are no longer viable investment asset classes. So all that leaves is Equities, Gold, real estate and bitcoin. It's all about TINA -> there is no alternative.
