You're absolutely right that most people who try day trading end up losing some or most of what they start out with. There are many reasons for this but I think mostly it's because our emotions tend to cloud our judgment when we trade. Ideally one should make a plan and stick to it (define your entry point and why you think it's a good price to enter, what your expected profit is and where you set a stop loss). However, a lot of people have trouble sticking to the plan, myself included.

Regarding the regulators, I'm glad they're trying to crack down on scams for a couple of reasons. One is pretty obvious and that's so people don't get swindled as much. The second is the volatility that the news has created in the markets. Like you said, the China news created panic selling and some of us bought that dip over the weekend and got some cheap coins. Looks like the markets are down a bit today but mostly my money is in this market for the long term so I'm not really concerned.

My concern with the government getting more heavily involved is that they'll make the tax reporting burden as much of a nightmare as they possibly can. The US tax code already has between 3-4 million words that fill thousands of pages and it can be very frustrating for people who have more than just a 1040EZ to fill out every year. I still do my own taxes and it takes longer every time I go through the process because they add more rules and regulations every year.