I don’t think any of this is accurate. My house is a store of value but not easily traded for goods and services, but can be sold for local currency to facilitate that exchange. There are many crypto exchanges with conversion to many currencies, including fiat currencies, but also between other crypto currencies. This is how price discovery is accomplished. If it were illiquid as you claim then there would be a ton of arbitrage opportunity in the inefficiencies and mispricings of crypto currencies. However in recent times prices are fairly rational across exchanges and conversion to fiat. The fraud claims you have seen overblown, FTX not withstanding. But I’d note that all financial markets are rife with fraud, hence the regulation.

I don’t think regulation is a bad thing in crypto exchanges specifically. I think any rational crypto exchange would welcome it. Despite claims to the contrary compliant exchanges in many markets not aligned to big players start up all the time. That’s great, and I think a lot of crypto exchange operators have been hoping for a clear regulatory regime from regulators in the US. The current “you better comply with unwritten regulations or we sue you” regime is absurd.