for crypto to become a full flesh currency it need to under go government regulation because that is the only way cryptocurrency will be considered a legal currency.
It is not about the cryptocurrency but the regulation about a currency of a country itself. everything about a legal currency in a country should be regulated under the government, under the law, and it must be under control. That is why in some countries, crypto is not legal as a currency because the government cannot regulate and control crypto maximally which is too complex maybe.
will government regulations on cryptocurrencies undermined crypto decentralized nature?
It will give the limitation also influence to the crypto itself.
ALthough crypto mostly is created for decentralized purposes, if there is more regulations about crypto in the country, there will be some limitations of the decentralization itself. But, the government cannot limit fully to every transaction andalso activities because it is also too complex.