The truly decentralized portions of the market can't be directly regulated. A feature not a bug as the point of decentralization is a trustless environment with no overlords, middlemen or gatekeepers.

The places regulation can touch are endpoints: fiat on/off ramps, legal entities (companies, orgs) operating in the space, people's freedoms in regards to the ability to interact with crypto etc. Regulating those endpoints in an attempt to manage the decentralized interior requires a level of nuance and respect for people's privacy and liberty that first-world governments have so far yet to demonstrate.

In lieu of sweeping regulations (which can have many downsides), the "web3" industry would be well served to get it's act together internally with tech solutions to problems like rug pulls, scam tokens, wash trading and such. The example of fiat markets shows such problems can't be completely eliminated but if tech solutions can eliminate just some or most of them that'd make the playing field safer by orders of magnitude.

Note to any unware: "Trustless" in this sense means the ability to transact without having to "trust" any outside authority to regulate, allow or manage the transaction for you. Everything programmatically handled and equally open to inspection and validation by all involved.