Government and their fear for Bitcoin!
Bitcoin as a decentralized digital currency that operate without a financial system or without being controlled by the government is really creating panick and fear in most government officials.
I don't know what governments of different countries are afraid of Bitcoin. But if that's what the government of my country thinks Bitcoin is, since Bitcoin is not controlled by the government, whoever owns the Bitcoin will control it. Transactions can be done from anywhere within the country or outside the country. So the government thinks that if Bitcoin is legalized, money will be laundered from the country, people can harm the country by purchasing illegal weapons through Bitcoin, etc. Also investing in Bitcoin is risky, anyone who invests in Bitcoin can get hurt. I think our country's government's misconception is that bitcoin is very popular now, bitcoin is risky but not so risky now. A middle class person can easily get rich by investing in Bitcoin. However, if the people of the country show interest in Bitcoin, surely the government can legalize Bitcoin.
I don't think your reason is valid, money laundering and arms trading are seriously illegal so even if bitcoin is legal or not, those transactions will always be done in the dark. No one is stupid enough to publicly reveal those illegal transactions, so banning or not banning bitcoin is meaningless for illegal acts.
One more thing, is forex and stock trading legal in your country? Because bitcoin like both are financial markets. It would be unreasonable for them to accept the remaining two markets and reject bitcoin for risk reasons.