Well, the answer is not so straightforward. It depends on how you choose to see it. From one perspective, too much regulation will mean that the sole purpose of Bitcoin might be lost. If government is in total control, then the dream of decentralization is as well as lost. It won't take time before it's just like Fiat. But there's also the positive perspective. Support from government could translate to reputation boost for mainstream observers. And with trust going up, more investors are bound to flock in.