Whether government can regulate code depends in part upon who controls that code. The more application space code is open code, the less government can regulate that code. The reason is straightforward. Open code is software in plain view. It is software that comes bundled with its source code as well as its object code.
Object code is the code that the computer reads.
If you display it on your machine, it will appear as gibberish. But source code is code that programmers can read. It is this code that allows a programmer to open an open source software project and see what makes it tick. By being able to see what makes it tick, open source software makes transparent any control that the code might carry. For example, if the code carries a government-mandated encryption routine, that routine will be apparent to open source coders.