At the early stages Russia ruled it as illegal, China outlawed all withdrawals and some other country also spoke against it. But now everything seem to be smoothing up at least on the government side. Surely Bitcoin must be seen as challenging their authority. Is there something I am failing to see? All it would take is a 51% attack or a new law.
I think firstly there isn't much negative stuff associated with bitcoin that it needs to be clamped down on. Secondly, it is not easy to completely outlaw it and may be more productive to regulate it. Thirdly, by outlawing it, it could lead to emergence of an underground black market which could make it worse.