Unfortunately bitcoin is often used for illegal activities including terrorism and itt anonimity contributed great deal to that. That is the reason why bitcoin had bad reputation very long time, some even considered it as a criminal currency although every currency in the world could be used for crime.
I think Bitcoin is not used for illegal activities much because if a person adopt bitcoin then he will earn himself without any bad activity like if he start trade or to start any other online job with bitcoin. So then he will not need any other illegal activity for making money.
As Bitcoin is digital currency and user only owner with full control of his wallet so it's like natural often used for illegal activities. There so much government has not control this currency so always risk to attempt criminal activities using wallets. I think government should control not only fight against terrorism, but also money laundering too.