Reason is simple, when our government looks at bitcoins, they are incapable of tracing any person or company holding responsibility for Bitcoin not only in their jurisdiction, but in the entire planet!
It is not that it can't be really traced since there are a lot of criminals caught using Bitcoin too so don't really count on it's anonymity. Governments don't make BTC illegal worldwide because they can only ban Bitcoin in their country, not really worldwide. Also, some countries look at it in the different angles and seeing it as a good currency in the future.
Yes that Bitcoin may be poorly utilized, criminals may commit illegal acts using Bitcoin. The hallmark of Bitcoin does have anonymously so it will greatly preserve the privacy of bitcoin owners. That is the main reason the bitcoin users, they get many benefits and also Bitcoin provide various conveniences such as security and also speed in doing financial transactions.