Blockchain known for its de-centralisation properties. Is staring regulation from centralised government in the face. How will it react. I wonder how such a clash of interests would merge. Will it be good or bad?
They can't regulate at a protocol level, so "blockchain regulation" is a non sequitur of sorts.
The only thing they can regualte is the crypto->fiat gateways, in other words basically exchanges, and that is all.
Of course, they can try to put government shills on the protocol development by getting rid of the Core devs and putting people like Jeff Garzik instead, which is why we must defeat segwit2x hardfork at all costs.