One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?
Without going into specific regulations (which of course depend very much on the jurisdiction in question); probably the biggest problem is legal uncertainty.
Bitcoin just doesn't fit nicely into many of the relevant regulatory frameworks. Even the question whether Bitcoin is a currency or a commodity is still open!
Bitcoin is most certainly sui generis and there has yet to be a definitive ruling on its legal status. Before we have that, running Bitcoin businesses is unfortunately a risky venture.
Although it is common for technology to out-pace the legal system, with Bitcoin possibly disrupting the highly regulated and monopolized monetary systems around the world, this issue is not to be taken lightly.