One of the main reasons is that the spread of scam is used as a result of the manipulation,goverment can not control the transactions, used in illegal activity and the government thinks it affects the country's economy but it is not the reason
i think by giving strict regulations to ico, it will filter out the quality, so competition will be healthy, and not many investors will be deceived, i think that is a good first step.
Bitcoins are involve with wrong activity. Terrorist use bitcoin for anonymous transaction and buy weapon. Drugs mafia are also sell there drugs anonymous and receive money via bitcoin which is destroying the economy and environment.