These points can be consider to understand it-

1) Non traceable - since government want to keep record of each citizens like his income, his tax, is expanses..etc; they cant track it by bitcoin.

2) Decentralized - government always want their control on currency so that they can maintain supply and monetization.but they cant do this if bitcoin regulated.

3) No identity - anyone can use bitcoin without providing his/her single detail, that is a poison for government.

4) Non backed - once the transaction get done(sent from one wallet to another),  no one can reverse this in any way.this is not good for government too.

5) its rate - bitcoin rate is not as stable as fiat currencies are. In this term a lot of citizens will be in too much profit and in other hand a ot of will be in loss.

we can conclude that why government dont want to regulate it.