So to summarize, the three important issues raised:

1. How do you collect taxes and avoid tax evasion.

2. Illicit activity control in the vein of what is done to curb online gambling (Visa/Mastercard act as enforcers by forbidding service to such businesses).

3. What kind of regulation would do the job (whatever that might be) while at the same time remain competitive with other nations. IRRC the needs for regulation focused mostly on consumer protection.