alleged 'illusion of bitcoin liquidity'? Citation requested.

So far nations don't appear to have a lot to worry about, and until crypto-“currencies” become useful to let normal people buy legitimate stuff that is actually worth having, with less hassle than doing it with actual money, a credit card, or PayPal would require, that is unlikely to change.

The problem with Bitcoin is that the issues it is facing now are mostly built into the system by design and are difficult to fix because the fixes require not only technical solutions but also political buy-in from entities that are strongly invested in the status quo (remember that something conceptually quite simple like increasing the block size resulted in a blockchain fork that gives no indication of going away). This also impacts other crypto-“currencies” because many of them basically hang off Bitcoin in some way (if only that you can only buy them using Bitcoin).

Remember that the people who benefit most from a crypto-“currency” are the ones who get in on it early and can hoard a comparatively large share of the available “coins” while they are still easy to acquire. The fabled Satoshi Nakamoto, for example, apparently sits on more than 1 million Bitcoins, which would be a nice retirement package if you could actually convert it, or an appreciable fraction of it, to real money (which you can't). Similar considerations apply to most other “coins”, where the main idea behind an ICO is to get people to give you free money without your having to deal with pesky entities like the SEC.