If ever it is banned, I think underground transactions and groups would flourish and still continue what was started 7 years ago. Underground marketplaces where people still asks for bitcoin for their goods including illegal merchandise and whatnot. it would still be there, the thing is there would be no third-party legal services that would cater exchanging bitcoin into fiat, same goes for registered merchants on and off the web.
The issue of there being no exchange would not be a problem in that type of situation. To cover your tracks you would simply buy quick selling untraceable merchandise to get fiat instead. There are always ways, that's why bitcoin being decentralized and uncontrollable make what governments think about it moot.