I have heard some stories about making bitcoin transactions illegal. It's all been a humor and I don't think any government have officially made bitcoin transactions illegal. Why is that?
Well I know a few countries banned the usage of bitcoins entirely. Not even on people in the country is eligible to make use of bitcoin and even buying it is illegal. There are few countries where bitcoin is banned and not available to the public like Saudi Arabia and a few more countries. Then the rest of the countries in the world are free and legal to use bitcoin in any way they want too.
The banning of certain is understandable because it may have some conflicts on their values and tradition, but for pushing to illegalized the bitcoin and other cryptocurrencies by government? Maybe possible but as far I had observed just like in my country the government is willing to enter the crypto world and provide ways for those to be use in transaction that was done in the country.