Those who are engaging on illegal activities by the use of bitcoin they are just putting themselves in danger. Bitcoin will having a negative mark regarding that once their government knows about it and for sure it is highly possible to ban btc in their country by the government.
Physical cash is the most common medium for purchasing hard drugs, firearms and other contraband in many of the countries. Did that lead to the banning of physical cash by the governments?
btc has been made popular by illegal drugs in the first place and that is why now so many people start to know of it. Although it has a bad start, it is the system that btc has makes it popular from then onwards. The system is very useful if it can be used correctly and a lot of government know that. That is why they dont ban btc but at the same time study on how to use it effectively.