It doesn't "solve" the problem, it's just not regulated the same way. If governments decided to extend the same regulations to crypto transactions, what recourse would a person have?
I'm not some crypto evangelist, but as far as I know, crypto at its foundation is a lot less "watertight" in terms of ascertaining who is who. Your government could pass laws to pressure your local money-to-crypto exchange service into complying with whatever regulation is needed. But they can't force the entire network of crpyto transactions to have real names tied to accounts, demand reasons for payment, discriminate based on what's being paid for, etc. So, circumventing payment processors' "grassroots" self-moderation requires finding a way to bypass basically the entire payment pipeline. Circumventing a hypothetical highly-regulated crypto environment just requires finding a way to sneak your money into the system. And there will probably be foreign or grey market services that don't care about what your specific country thinks.
The difference is that a government or company can't ban you from using a cryptocurrency. They can only make it more difficult by banning your access to certain exchanges or something similar.