For lawful customers and transactions, that would be an appealing and secure alternative to bitcoin and other cryptos because it would hammer the credit card industry by forcing them to reduce or drop their transaction fees beyond the minimum needed for fraud prevention. They would end up as mostly consumer lenders. A smart and disruptive credit card company could go that route first and quickly become the card of choice for many merchants if they did not charge the current hefty transaction fees.
As for bit torrent, it effectively steals revenue from content creators, but since content piracy is illegal, bit torrent has not destroyed content creation. Similarly, if bitcoin and other cryptos were made illegal if they did not follow banking regulations, they would soon be marginalized. Yes, they might persist as a way to pay anonymously like cash, but the dramatic run up in crypto value would be reversed. With crypto mining becoming less profitable and perhaps made illegal, the current crypto enterprise would be in jeopardy due to inability to promptly clear transactions and competition from cryptos backed by actual currency.
But there’s no reason to do that. The POINT of crypto is getting AWAY from the dollar. If people who wanted to use it as simple EFT they’ve already got a million ways to do that (Googlepay, Applepay, Venmo, debit card...).
You can have lawful transactions and not feel a need to get the government involved. Think yard sales.
Just because the torrents haven’t killed content creation doesn’t mean the whole process hasn’t damaged the industry. But torrenting is definitely not marginalized. And non-crypto won’t be either. And none of it will be less profitable. Because, again, basically NOBODY that is involved in crypto wants the government involved. Even the folks doing legal stuff want to be away from the government just because screw the government.