I think that a cryptocurrency cannot be properly be regulated in a way to protect the users. A cryptocurrency is just a software running on computers. Owning crypto can happen by keeping safely a private key onto a piece of paper.

The only way to "regulate cryptocurrencies" is to clearly specify if they are seen as currencies, as assets or as (worthless) "Monopoly money".

What should be regulated and it's quite easy to do so are the businesses, especially the exchanges and payment processors, no matter they work with fiat or not. This would indeed imply that crypto is recognized to worth certain value. And this means obviously KYC, but the the users should be protected by the laws.

Keep in mind that with regulation also comes the proper taxation (but governments already get us pay taxes even without properly regulating crypto).