That's the wrong question. Nobody cares how the elites in the government feel. They exist to serve us. That is the only reason they have any power at all.
The right question is: how can we make it mathematically impossible for the government to oppress us in any way, regardless of how much they seethe and rage about it? Their happiness does not matter. In fact their anger is probably a good sign that the technology is working as intended. The angrier they get, the freer you are.
The angrier they get, the higher is the chance that they make your technical solution illegal. What, you're using technology that might endanger children? All the concerned parents are suddenly your enemoies, democratically speaking. What? Your technology can be used to do money laundering? And you're using it still? You can now anonymously pay only darknet vendors and other shady bussinesses. Have your anonymity, but cut off from the rest of "good" society.
Given the original motivation to actually invent crypto, I am surprised it wasn't outlawed a long time ago. No goverment likes to be overthrown...
Governments must continuously increase their tyranny in order to maintain the exact same level of control they used to have before. There are two possible outcomes: a free and uncontrollable population emancipated by ubiquitous subversive technology, or a totalitarian government so oppressive that even your concerned parents feel the weight of its boot on their faces.
It's my sincere hope that we'll discover the true limits of the government's tyranny in the process. The harsh truth is people need to accept the existence of some amount of crime if they want to live with basic human dignity. It's just like how the banking industry accepts some degree of fraud as a business expense. They could stamp it out, but the security requirements would add so much friction to everyday transactions nobody would buy anything.