This is known as regulatory capture, and yes that’s exactly what has happened in every major industry. Established players help write legislation that favors them and raises the barrier to entry for the entire market.

Disrupters like those you mention find loopholes in the laws and exploit them long enough to litigate their case. In parallel they lobby for laws to make their businesses fully legal. If they fail on either front, they usually have run their gray market operation long enough to have spent all of their investors’ money.