It's like regulating a black market; you have to regulate either the entrance or the exit, once someone gets inside there's no regulating what they do within the walls of the market. Meaning, you go after exchanges or merchants and stop them from accepting Bitcoin in exchange for goods or services, and then plan around using that as a means of "regulating" the use of Bitcoin within a country.

You can't really get after it otherwise without blocking nodes on ISPs within the country. That's something that isn't really easy to pull off.