The argument could be made that this move by Germany is actually a ploy to make Bitcoin look like a paperwork/legal nightmare and time-moneysuck so that merchants will stay away from it.

Bitcoin is too useful to be squashed by mere government regulation. If a few more countries employ these draconian measures, some cash-starved government will welcome Bitcoin in the future.

If regulators ("the body of Leviathan and the head of a social worker", to lift from Joseph Stromberg) were smart, they'd advocate easy exchange rules and impose a small tax on each transaction on the exchange.

Over the course of generations, I tend to have more faith in markets than in governments. That's why I think regulators will fail in their efforts in the long run.