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Oh, they can ban it all right - but will it be effective? Hardly! The sweet irony of China closing down exchanges at the same time they're using BTC to help North Korea skirt UN sanctions:

http://cryptohero.info/cnbc-and-the-cia-team-up-to-bash-bitcoin/

This is the Faustian Bargain of Nation-States in a crypto world - they want its border porousness but not its decentralized censorship resistance. They want it "controlled" and pseudolegal so their opponent Nation-States don't get a leg up on them.

They're playing footsie with Promethean Fire. They will get burned in the end. Good post as always, @stephenkendal.