Once you regulate BTC it adopts a lot of the properties of fiat. But why would the type of person who only uses regulated currency see any difference between regulated BTC and regulated fiat? There would be no reason for them to substitute their fiat for BTC, right?
Except if they are also speculators themselves who are only interested in the numbers. This will result in lots of investors coming into Bitcoin with the only purpose of profiting from it with no intention of actually using bitcoins.
They can still promote the other utilities of Bitcoin, cause it will still be more secure than fiat on the network level and would still be very much borderless.