AWKWARD ZOMBIE

Pfft, imagine if Katara's decree actually made it to where more people figured out how to bloodbend.

"Hey, you can't do that thing on the full moon where you waterbend a person's body anymore."
"We can do that?

Chances are, it became illegal after more bloodbenders became known and started using it. Katara, as a bloodbender herself, more than likely saw this as a problem that would need to be nipped in the bud quickly.

I'm kinda wondering how people know bloodbenders are a thing.

The only ones who knew bloodbending in the original series were Hama and Katara, and Katara was wholly against the thing, so it wouldn't make sense for her to discuss what happened with people, as it might inspire others to try it. Her and the Gaang should have just never discussed it afterwards and let it die, or deal with it if someone got the idea (Yakone could have made that happen, but he wasn't a known bloodbender to most people, yet Korra could recognize bloodbending when she dealt with Tarrlok before knowing the truth about Yakone, meaning she had to know the term from somewhere).

This seems to lead me to believe that someone in the Gaang has loose lips. My bets are on Sokka or Katara.

Katara caused everyone to lose their powers.
Hahahahahahahahahahahahahahahahahaha

Katara got drunk one night and rattled on about trying to bend the alcohol out of her blood

Can cactus juice be waterbent?

Cactus juice bends you.

See, we can't just assume there were only ever two bloodbenders. We credit Hama with creating the technique, but we don't really know that. A technique like bloodbending would probably have been found by several people, scattered across the planet. All they'd need to do is suddenly realize what blood is made out of and then get all nefarious about it.

There were probably a lot more bloodbenders in the world. Some of them came out of hiding in Republic City, or somewhere else in the world. Shit went down and they made the practice illegal to help try and deal with it.

Alternatively, assuming Katara and Hama were the only two, then Hama took away several people with her bloodbending, and Katara threatened two Fire Nation soldiers with it. There were witnesses, and I'm sure some of them would have talked about the bender who was so advanced they could bend blood.

We'll probably get some more backstory on how bloodbending became outlawed and such, since we got those flashbacks in s1.

Yakone tells his kids they come from a long line of Bloodbenders. So I'm guessing it's simply been kept a guarded secret amongst those who knew how to use it. Anybody mean enough to master it would be scared enough to keep others from learning it.

I hope they go into more detail about how Amon took people's bending away. I know Tarrlok said he used bloodbending, but that's...it, really. Are we supposed to assume he just blocks their chi points or something?

That is bodaciously exactly what he does yes.

That's why Korra could use Airbending. Amon blocks chi points currently in use. Hers wasn't being used and thus wasn't blocked, but now could be unlocked easily because all her chi had only one place to go.

Hama might have told more people than Katara.

Also, there may have been existing rumors in the Northern Water Tribe of blood bending. It's a wide world out there, people have local legends.

Back to the discussion of whether Bloodbending causes pain, Tarrlok specifically said he wouldn't do that to his brother after having it done on him.