1. Regulation means that government want to controll exchange platforms and their users, as I understand. Also government want to get tax from bitcoin holders (it is different in all contries).
2. Because market is full of scamers. Look at the count of ICO project, amd 90% of it is scam. Their founders only collect money and do  nothing else.
3. Yes, it is about ICO and tokens politics. For example, in US all each projects are analysing by SEC and they dicede its mature (shares, bonds, ets)
4. Investors work on regulated marked, so they have more security and freedom. regulators also help investor to deposit only in real projects (if we are talking about ICO).