However, in the long run these rules and regulations will be what is needed to bring in more investors.

I agree. Regulation is basically a great thing for crypto market.
Think, for example, to fiscal taxation of crypto profits in the US. When it was announced, crypto market had some moments of panic.
But, for a speculative fund who wants to invest in crypto market, having a clear fiscal context is essentialfor profits calculation.
An unclear fiscal context means that after trading the fund manager is thinking: "well, i've got X money from crypto market. Now.. Well, now we have to wait for the government and hope for the best". This is madness.
I study economy and financial markets at university and this level of uncertain is unacceptable for traditional standards.
Regulation is needed.

Also, for example, by themselves crypto exchanges dosn't guarantee the security standards that institutional investors need of for investing in crypto market. In facts, many exchanges are buying traditional market operator to improve their skills and technical resources. Regulation can force exchange to work on this and allow great infestors to feel more confortable.

So yes, you are right. Regulation is a great thing. Long life to regulation!