So does physical fiat currency, and physical fiat currency is virtually untraceable, unlike bitcoin, which has a public ledger for every transaction (although it is pseudo-anonymous).

You want to ban that so drug dealers have to find a more creative way to make money? (And they'll find a way. I'm still surprised they managed to find a way to use Tide detergent as currency to sell drugs).

http://nymag.com/news/features/tide-detergent-drugs-2013-1/

What point are you trying to make? Sounds an awful lot like the "Let's ban peer-to-peer filesharing, because it's used for copyright infringement" argument.