I have been doing a bit of research into this topic.

What I am finding is that Bitcoin and other cryptocurrencies
are taking the place of, or at least pushing aside, purchases of
gold and silver, especially since precious metals are obviously
being manipulated. Apparently, gold, silver, and now bitcoin
become preferable as an investment/safety vehicle when
confidence in government fades. There are many voices
who are ringing the bell that there is going to be a
sovereign debt crisis (think government bonds) very soon --
many claim by the fall of this year.

I still cannot uncover a wholly believable and verifiable
reason, as things now stand, as to why governments are
allowing bitcoin.

I might buy into the "legitimizing" theory, as it is very
plausible, if it weren't for the fact that people who
create their own currency tend to end up in
federal prison.