Why bother, when they can just use existing laws? Classify bitcoin users as banks, then fine them for violating existing transaction-reporting laws.

IANAL but I think that a court might not look kindly on an argument that turns every person who is using something into a bank. The decentralized nature undermines that argument.

As to reporting, there's no reason in principle that bitcoin users can't report the money they owe for taxes and the like. More of a problem if you pay an anonymous individual for some service, but that's less of an issue if you aren't hiring them for an extended period of time.

But it's only a matter of time until the media begin the blitz to portray Bitcoin as a tool of terrorists, druggies, black-hat hackers, gunrunners, money launderers, and whoever else will scare their viewers via guilt-by-association. Oh yeah, I forgot to mention pornographers, and by extension, human traffickers and child molesters. That'll be enough to get political support for a crackdown, I imagine.

Unfortunately, if bitcoin ever becomes very popular, then it will be reasonable for the people who really don't want a government eye on them to use it. Undermining authority works both ways: it might be nice for us but it can benefit those one doesn't like also. At present, terrorists/guerrillas/freedom fighters/militants use complicated and cumbersome procedure to moving money around. Bitcoin could offer them a strong leg up. The most dangerous type of media-driven moral panics are the ones that have some element of truth.