Regulating cryptocurrencies can have the same effectiveness that regulating information exchange through the internet had. Yeah sure it can be a bit impractical or scary for most to go around artificial limitations imposed by their state but it is practically impossible to keep the really motivated from doing what they want.
There are many regulations are about how certain things should look, for example, construction code, or food quality control. Even internet has been changed by regulation, like the EU data protection plan, it is just behind the scene, but greatly affects the way how company operates.
So I don't think there is a clear cut between regulation and things affected by it. There are intrusive ones and there are reactive ones. As to Bitcoin, I think it is probable that the regulatory body will require transparency for recognition of its legitimacy as a demand.
Bitcoin is technology. It’s assembling different parts into a tool that people can choose to use. Much like a car is assembled from different parts.
Regulation is politics. It’s a social phenomenon that concerns how we use the tools offered to us by technology.
The issue is that most, if not all, tools can be used both ethically and unethically. This reveals the fact that regulation has nothing to do with the tool itself, which means trying to modify the tool itself — as a form of regulation — doesn’t make sense, since it ends up hurting the people who use the tool for doing good.
By all means, prosecute people who break the law, but do we really need to regulate the shape and size of vases, such that they can’t be used to hit a spouse over the head during an argument?