I do not agree with your opinion and the reasons for the decline in the market that you have indicated. I doubt that full market regulation will have a positive effect on the cryptocurrency industry. In this case, the market should completely change.
Yes, market regulation can increase crypto market's morality. I believe that investors are the core of crypto and if they will backing out due to security reason then it have a great affect in market so if only security is regulated much more on every new ICO then they feel secure on their investment and we know that more investors will change market volatility and bearish market will rarely happen.