The sooner the better

The biggest leaps in the crypto sector come from external action. Collectively, everyone knows how to do better more resilient stable value. Collectively, everyone knows the limitations of custodial arrangements.

They just won't act, en masse, until they have to.

If the government stayed out of crypto we would all be using single signature accounts with Silk Road having a monopoly and crashing every few hours on super slow Onion routes, just like it was 2012.

It really doesn't matter for the interesting things happening in Crypto. Bitcoiners are fine with the price changing. Web3 and other utility including cheap and fast value transactions (think Lightning and Cardano) will continue to focus on the tech and adoption. Sure some will be discouraged from using something volatile for payments but this will show something volatile is better than a failing "stablecoin".

So I won't even say the sooner the better. I don't know what the best timing is. No matter the timing it will help some and hurt others. That's what happened in the 2008 bailouts.