I think the government cannot regulate cryptocurrency. Technology blockchain implies anonymity. That is why government agencies will not be able to fully control the cryptocurrency.
No one, not even the government can regulate the cryptocurrencies because they are mostly decentralized but the crypto exchanges are not yet decentralized so they are the target of government 's regulation. A regulation that is strict will really bad for the cryptomarket but there are already some countries with crypto friendly regulation which only aim to protect its people from criminal elements that uses cryptocurrencies in illegal activities.
DEX has less demand compared to the centralized exchange and you can't even consider dex as the main thing to take a conclusion about how decentralized the cryptocurrency is. Regulation will give convenience to the investors because they get the more guarantee but it should not very strict as stock market.