From recent news in India it is heard that bitcoins are used to sell drugs..I know its a currency and it is also used as a normal money... but these can create a bad space in people's mind that bitcoins are used to sell drugs..so they will not use bitcoins... Conclusion is that BTC is also a currency which is having a high value in the market..and bitcoins must not be used in these illegal activity which can reduce its usage and value.
Ideally bitcoin should not be used for illegal activity but because of the anonymity of the accounts, it is not easy to track transaction with syndicate activities. Cryptocurrency is currently used as payments to complete the cycle of dirty transactions all over the world though the activity is not much widely used but increasing. However, there are already a cyber police that are working on it and suing the offenders.