Regulation will be better in the long run. I look forward to a crypto scene that is less scammy than today.
The only issue I have here is that regulation may kill some projects with small teams that are worthy; granted, I can't actually name such a project in the ERC20 realm, so such a thing may be non-existent. But if you look at the larger field of crypto and examine something like ANS/NEO, you will see an enormous market cap for something that started with a small team of developers. That project has acquired at least the appearance, if not the reality, of credibility.
The real, underlying problem with ICOs is that you have groups with fake white papers and dev teams that either don't exist or have falsified credentials trying to take people's money. It doesn't take much homework to figure out who is a scammer, and yet people would rather drop thousands of dollars on the ICO in hope of a quick turnaround rather than try to figure out whether the dev team is going to loot the smart contract and bail (or worse, scam people with a year-long ICO).
Regulators can't make stupid people smart. The only thing they can do is stop some scams by choking off entire venues of fundraising. Eventually, the only truly effective way to stop scammers, will be to prevent anyone other than large, accredited groups from starting an ICO of any kind - on or off the Ethereum blockchain.