Bitcoin isn´t big/stong enough to really disturb government and big banks, probably a minor incovenience by now, we see some talks about regulation here and there, but nothing concrete.
But as it gets more popular and a direct impact in their operations start to appear, it´s reasonable to think action would be taken, even making it illegal.
Sure they won´t be able to seize our bitcoins, or stop transactions, but this won´t matter, the support and general belief will suffer major damage, price would crash to hardly recover ever again.
US took down major and global poker sites overnight due to suspicion of illegal activities around it, why should be different with bitcoin ?
The thing is that bitcoin is decentralized.
If bitcoin was centralized then obviously it always has the risk of getting shut down by government. But this is simply not true. Bitcoin's value is based on the fact that there is a fully decentralized ledger that is running that keeps all the transactions.
Thus, if the government wants to shut down bitcoin, they would have to shut down all the bitcoin nodes.
And this is impossible, considering the sheer size of nodes. And it's only growing. So the only way to 100% shut down all bitcoin activity would be to shut down the internet which would not benefit anyone.