Ehhh... One of the founding principles was that it doesn't have a central issuing authority. The supply of bitcoin can't be controlled, which makes it immune to politically-convenient devaluation or debasement, unlike government-issued fiat currency. Or in laymen's terms: The fed can't just print more bitcoins.
Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.
The same way transactions in any other currency are controlled: by making laws that say what you must and cannot do and what penalties apply if you don't comply.
You can regulate things around bitcoin (ie exchanges), but you have no direct control of whether or not a wallet is able make transactions. You can't freeze a bitcoin address and associating an address to a real-world identity would be easily circumvented.
Indirect control of the form "you broke this law and go to jail" is perfectly sufficient. And it is in fact attempts to disassociate addresses and real world identities that are easily circumvented when you have the resources of a government.
The difference is ease, physical currency is much harder to break apart and move around in large sums without eventually going through something the government regulates. If you kept your transactions entirely in bitcoin, I do not see how anyone could control what you do.
Mmm, they kinda can: they can deploy a large cluster, let's say 90% of capacity, hoard mined coins, then release them at once - booms, effect is not that different from printing.
Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.