There is an international system of finance, banking, and money. There are rules: If some person, company, or country doesn't play by the rules, then they are not in the system, and that means that they are limited to at most very small things.

We know a lot about this system because it got a lot stronger trying to stop the money flows for terrorism, drugs, and tax evasion.

Well, for the "regulations", one can be that the system will not exchange with crypto and will not work with people who do. There are already, call it reviews, of any relatively large transactions. If something smells like drug money, terrorism, large scale tax evasion, etc., then law enforcement can get involved, crash into a house or office a 3 AM, grab all the papers and computers, grab phone tap data, grab Internet traffic data, etc. and put together a case of violation of crypto laws and regulations.

There's a fundamental point here: Sure, on a small scale, the regulations are tough to enforce, e.g., cost more to enforce than get from the enforcement. BUT the fundamental point is, for any illegal activity to make or spend much money, a LOT of people need to know about it and, then, sure, law enforcement also knows about it and can take action.

Cryptocurrencies may be decentralized, but their key people are not.

Take ICOs, for example. If ICOs continue on their current path - selling tokens to U.S. citizens that pass the Howey Test [1] - the feds will crack down on the largest and most flagrant violators faster than you can say "Ron Paul 2020"

And, it doesn't matter that these ICOs ban U.S. IP addresses from participating, either. From what I've read, the burden is on those selling the security to verify who they're selling it to.

[1] http://consumer.findlaw.com/securities-law/what-is-the-howey...