In the United States and in Canada there are requirements that one report cash or bearer instrument transactions over a certain size and in certain circumstances but they are not illegal. In certain parts of the EU there are restrictions on merchants accepting cash for transactions over a certain amount. I also suspect that it is a matter of time before cryptocurrency regardless of how anonymous it is will be treated the same as cash is this respect.

As for cryptocurrency being made illegal in those countries with convertible widely traded currencies such as the US, EU, Canada etc the chances are very low and all indicators are against a move toward banning cryptocurrency. What we are seeing and will see is the regulation of all the intermediary players and service providers. It is for this reason that DRK has a much higher regulatory risk than XBT, or XMR, since the masternodes due to their limited number are a prime target for regulation. I would say the same for semi centralized structures such as delegated proof of stake, and currencies such as Ripple and Ethereum. In those countries with exchange controls for example Iceland, China etc., the changes are very high that cryptocurrency will be made illegal or already has.

Spending some time understanding how government regulation actually works, will go a long way to understanding  what the regulatory risks actually are. I stand by my position that a pure POW decentralized crypto-currency such as XBT or XMR has very little regulatory risk at the protocol level; furthermore there is already a fair amount of information on where the regulators actually stand. This in not the case at all with a very large proportion of the alt-coins and assets on the market today. The key thing to understand here is that any amount of centralization no matter how small will likely attract government regulation.