>More regulation won't help here, because the regulation-maker is itself the hostile party.
It's easy to paint the big gov as bad, but this is a case where unfortunately the populace seems to be in agreement with the big bad gov. While most US citizens support encryption, 76% or so, the vast majority 63% also favor government "backdoor" access for national security reasons.
I guess either we believe in democracy or we don't. It could be said that if Veracrypt isn't/can't be backdoor'd, perhaps the gov is simply implementing the will of the people :( via Microsoft.
Tyranny of majority is a thing. It's something mature democracies are aware of and have the ability to defend against.
We're in an interesting spot here and the tension is tangible.
What does democracy have to do with electronic encryption? Democracy existed before computers.
There are legitimate reasons for governments to intercept information, with the correct oversight -- enforced legally in an "checks and balances" manner. The fact that there is a breakdown of trust between government and people won't be solved with more encryption.
A core tenet of Truecrypt + Veracrypt (developer guarantee) has always been no backdoors, even if requested by government.
If in a democratic society, the majority agrees that government should have backdoors (with the correct oversight). Then it follows that Veracrypt should be illegal as its use is not in alignment with the will of the majority.
I personally don't agree with the majority here but can you fault the logic?