If you have been a crypto hodler for a long time, this question will likely make no sense to you. However, as Bitcoin is now above $50k, this question is raised again by regulators, e.g. in the US, but not only. Dan Nathan, founder and principal of Risk Reversal Advisors, recently declared on CNBC:

If you think the U.S. Treasury and the U.S. government will let this thing get out of hand where literally corporates are starting to replace dollars…

Should we worry about what the regulators can do?

It is unlikely that Bitcoin will be banned because it has become some much important that if it is banned, it will provoke a capital flight, which is quite easy to do with Bitcoin and altcoins. Therefore, the higher the value, the more unlikely this ban. We might have reached the non-return point already.

However, as explained by Dan in the same interview, the regulators "can regulate the hell out of it".

How to get ready for that hell of regulations?

The centralized exchanges are the biggest risk for crypto hodlers. As mentioned in a Coindesk article:

A U.S. citizen is suing the Internal Revenue Service, which could have wide implications for all cryptocurrency holders and privacy rights. CoinDesk privacy reporter Ben Powers gives a rundown of James Harper v. Charles P. Rettig, in which the plaintiff argues the IRS had violated Coinbase users’ constitutional rights by sending 10,000 letters warning they may not have paid taxes properly.

Please read carefully: 10k letters have been sent to Coinbase users warning they may not have paid taxes properly.

"They may not" means you are potentially accused without any evidence. You can see how dangerous it is to have your name registered on Coinbase or any other centralized exchange. Other governments may proceed the same way as the US, it is just a question of time. Therefore, centralized exchanges have to be used only for the initial crypto purchase, but once you have done that, you'd better transfer it to your personal wallet, which does not belong to any third party company and or to any national authority. The DeFi is the best reply to that risk. Hopefully Ethereum fees will be reduced in the next two years with ETH 2.0 full launch. In the meantime, the other smart contract blockchains like Cardano, Polkadot, Cosmos will also allow you to use DeFi.