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.
I do not think bitcoin is not illegal activity, bitcoin just like you are trading other digital currencies like forex trading trading USD then I think it is not illegal action just yet there is no clear regulation about bitcoin.