It can increase the trust and even help, but the current regulations (or attempts) are damaging the crypto reputation more than anything else. In another hand, accepting to be regulated may lost the credibility of any project.
In terms of trading volumes, in my opinion it will be just related to what I was saying above. If more trust are put in cryptos, more people will buy, so more volumes and so higher prices.
The trust here will majorly be centered on the big time players who would not actually the way it is now, jeopardize their investments when the whole market is simply doing whatever it likes. With that trust, a lot of bigger investors, know exactly what they are investing in, would also be rest assured that scams are limited or eliminated and that would make the idea of the whole market change and like you have said, the more the bigger players, the more smart and new moneys enter the market.
Regulations may give negative impact in short term but if you notice it may give room for many institutions and individual to come forward investing into cryoptos with more confident. Hence in long term regulations will give more positive impacts at least in terms of adopters and investors.
