The policy when working with regulators in the Ethereum ecosystem should suit everyone. White and black lists, blocking in smart contracts and a large number of level 2 solutions and even level 3 solutions will make Ethereum the main coin in the future.
This ecosystem has all the famous stablecoins and huge trading volumes.
I'm on the fence about that. Sure, getting buddy-buddy with the regulators could help Ethereum become top dog one day by making it seem more legit. But it could also backfire. The regulators might force Ethereum to add a bunch of red tape that makes it harder for developers to create new apps. Or worse, they could just ban certain kinds of transactions, which would be a punch in the guts.
So it's hard to say if getting regulators on board is worth the risk and ethereum has done pretty well so far just doing its own thing without worrying what the higher-ups think. Then again having the big bad government's blessing could convince more people to jump on the Ethereum train. At the end of the day its hard to predict how it would all shake out.
Politics have not worked in the crypto world for a long time.
Modern smart contracts have built-in blocking and backup functions, which are enough to solve many problems. And adding a list of several hundred prohibited wallets to the code is not a problem.