I'm wondering this because is such a real threat to bank system and we all know how banks and governments are tightly linked !
BTC could make people more autonomous, self-resilient, being their own bank. You can use it like cash, making your transaction almost untraceable (or untraceable using e.g. monero or dash or laundry systems) : this is governments worst nightmare, isn't it ?
some reasons why the government does not legalize Bitcoin is:
1. Bitcoin prices cannot be controlled by the state.
2. There is no guarantee that the price of Bitcoin will be stable, the Government is afraid that if the price of Bitcoin falls, many of its citizens will suffer losses.
3. Anonymous Transactions, so the government cannot trace the person doing the transaction.
4. If all citizens use Bitcoin I think the currency of that country will be destroyed.