In my country the situation is pretty stressed up when it comes to buying and selling of the bitcoin. RBI which is central authority here has warned he local banks from denying the services to the crypto related bank account holders.
So we have only one option to trade and invest into the bitcoin and thats LocalBitcoin. I cant even think about the trading of crypto currencies into fiat currency directly as it would be tracked down and could lead to ban over accounts.
Now recently I am intrigued with the news that Unocoin one of the exchanger in India has now overcome with this situation by placing the ATM's in India. So I guess thats option #2.
Yes your bank account will get banned, if your bank account recieves funds from Crypto exchange or they are able to track the fiat source. But, only Private Banks are creating such issues. If you are using a Goverment Bank or a Co-operative Bank there is no problem As the law states you can trade Cryptos, which means you can still recieve/send funds. I have been using SBI and have not faced a single issue.