Some level of regulation is needed, especially if we with to see crypto more as a currency. First, cryptos must be very stable(for example tether, which usually stays in the $1 equivalence zone). Regulation will mean that volatility should reduce remarkably. And here is the case market is driven by demand and supply. It becomes extremely monumental to control forces of demand and supply of fixed coin/tokens in a decentralized environment.
Regulation itself will not reduce volatility as it will still remain a decentralized market, but it would usher in some policies that would help to curb some activities that can at least limit some of the things we get to see today. Some of those things such as scam, manipulations, and all sort of things, will start diminishing.
Plus, for most part of it, it will then become pretty easy for a lot of investors to see it as a space they can at least invest in without any fear or doubt of the future.