The main goal of the government regulating crypto is to stabilize the price of coins. If it has been arranged, I believe that many investors will join the crypto currency because people's trust in crypto will be even higher. But if it is regulated, I don't think all investors will agree related to the anonymous system of the crypto itself.
And, tracking crypto is also something which would be rather easy as long as people don't use a privacy coin I think, again with reference to "the average user" incase of adoption, they would probably not want to go through difficult channels just to sell/buy crypto, that'd mean going through an exchange = generally have to provide private info, especially for when cashing out.