This is not the first time we heard this kind of things, most of the time media covers the news that Bitcoin being used for money laundry, for supporting terrorist and other bad thing, but most of them failed to notice that Bitcoin is only a medium, it's only a currency, how people used it, it's not related to Bitcoin at all, we should remind everyone to used and promote Bitcoin for positive things and media need to cover more positive side of Bitcoin
negative stigmas always have the tenancy to have more of an impact and stick around longer compared to positive news. unfortunately, most people don't have the ability to see the biased mainstream media for what it is. not to mention, negative news tends to get much better ratings than positive news, with a few exceptions here and there.
maybe the government worry if they accept bitcoin then bitcoin is just for illegal activity than for legal things. but I am sure that there are many bitcoin users that want to use bitcoin as a legal and don't want to use bitcoin for anything that could break the law. but I think not just bitcoin that could be used for illegal activity, we know that cash is the most victims for this and from the old times, cash is always used for illegal activity. and it depends on the user, what they want to do with their bitcoin.
i dont think that's the government's first worry, no matter what it is, if it has the potential to be used for crime, people will use it for crime. simple as that. it can be regulated, but you can never police bitcoin enough (or anything really) to stop all criminal activity associated with it.