Because we can’t have a fiat currency based on nothing but the good faith of the creator and the caprice of marketplace...
If Bitcoin is banned, they will simply run it out of another country, and convert to dollars when people want to make withdrawals to spend their Bitcoin funds.
Brad Sherman is absolutely right, that block-chain based currencies have the potential to deprive governments from getting fiat accepted. He is horrified by that idea, while I think it might be a good thing.
I have wondered for a while why no one has introduced a cryptocurrency that is redeemable for something of value, a convertible currency. If I had a few billion, I might buy a few billion in S&P ETF shares, or even gold, and then issue a cryptocurrency backed by that asset. Bitcoin sort of works because the originators created a fixed number of coins that the rules of their system do not allow to increase. Bitcoins have no nominal value, but at least they can’t be diluted by new money being created (as practiced by central banks everywhere). With my convertible coin idea, there could be new creation of coins but only by increasing the reserve underlying the currency. You could have a fully backed currency, with the issuer making a living from small transaction fees or, more dangerously, allowing the issuer to maintain only a fractional reserve who makes money by lending money he doesn’t really have. Different currency issuers could operate under differing rules, which would create a market in which the “good” monies would drive out the “bad” (assuming we are smart enough to tell the difference).