Even if democratic decisions were validated, there are rules that even the will of the majority of the people cannot overrule. For example, democracy cannot overrule the laws of gravity. It does not matter that the majority of the population would like to see these laws overruled. Any such attempt would have to be rejected anyway.
The laws of gravity show that there is a higher power and that the population shall not try to overrule this higher power but shall instead obey to it.
It is not that the population has never tried it before.
Hitler truly won democratic elections, and he had never made a secret of what he was going to do. In his book Mein Kampf he had clearly announced that he was going to target particular demographics, in violation of what we could classify as the laws of gravity. After the war, the German apparatchik could have tried to point to democratic legitimacy for what they had done, but that was not what the International Military Tribunal thought about it:
August 1945. Charter of London. Article 8. The fact that the Defendant acted pursuant to order of his [democratic] Government or of a superior shall not free him from responsibility, but may be considered in mitigation of punishment if the Tribunal determines that justice so requires.
But then again, what we usually call democratic, is not a majority in the population but a majority in the representatives of the population. There is a deliberate policy in place to confuse both. They claim that if the majority of the representatives agree, then the majority of the population agrees. Why would that be so? In my opinion, it is a spurious claim. There is simply no reason to believe that this would be true. If the representatives truly believed this, why not put their decision to the test and ask the population to confirm it? In this day and internet age, there would be not much of a practical problem to do that. If they do not want to ask the entire population, why not ask a sufficiently large, random, and statistically significant sample of the population if they would make the same decision as their representatives?
They don’t do this, because they perfectly well know that their claim is simply not true. Therefore, within the framework of democracy, decisions made by representatives of the population have exactly zero democratic legitimacy. They are just brandishing their unvalidated claim to legitimize the illegitimate. Parliaments and congresses are just a con job. Therefore, I reject out of hand any unvalidated claim of legitimacy made by the conmen in terms of regulating bitcoin.
But then again, concerning democracy itself, even if the democratic majority of the people want something, it will often still not be legitimate. The fact that majority of the German population democratically voted for going after the Jews, did not make it any more legitimate. It still amounted to vulgar criminal behaviour.
As King Mohamed VI said in 2004 in front of his parliament:
I am just the commander of the faithful. I cannot give permission for what God has forbidden or forbid what God has permitted.
Democracy can only function if it is validated, and if there are clear limits to what the population is allowed to decide.