Well sources please ? And by that I want registered legal worldwide sources. Saying that there are "reports" doesn't mean that anything of this is true or false. People every now and then come up with anything and spread it around the internet.
Anyway, if this came out to be true I wouldn't be impressed. Since it's the only economical thing free of regulations, he surely should give it some importance.
How it affects crypto to average people ? Well I don't think it would be worse to people who already believe that it's used only in illegal stuff (since a year or 2 back that's what all you could about btc in the media). Telling them NK uses it won't matter to this type of people.
But others who're interested in it but haven't joined yet might actually fall back.
giving the fact that other governments could use this to enforce regulation on the matter?
Well governments aren't waiting for any specific thing to ban or enforce any kind of regulations on crypto. If they want to ban it they'll come up with the perfect reasons to the public. Just saying that it is a danger to "national security" is enough for them. Who knows maybe govs are investing in btc too.