While many crypto investors are keeping an anxious eye on the blockchain bubble, there is another area of concern that they should also be watching: the regulatory front. Even now, state and national governments around the world are stepping up their efforts to bring some sense of regulatory order to the cryptocurrency ecosystem. And while it’s true that digital currencies were originally developed as a way of getting around invasive financial controls, there should be little doubt that the industry must eventually make peace with the idea of sound regulation if it wants to ever achieve true mass acceptance and adoption.

Digital currency critics — and even some officials who remain open to the technology — have long cited the many challenges posed by the digital currency revolution. For example, one of the biggest problems in recent years has been the perceived use of crypto to launder money, fund terrorism and purchase contraband on the so-called Darknet. That assumed illicit cryptocurrency use helped prompt the International Monetary Fund to call for a crackdown on digital currencies.

At a more basic level, there is also concern about the less-than-scrupulous business practices of various initial coin offerings — or ICOs. Regulators around the world have struggled to address this new and unregulated way of raising capital. Many governments have identified various problems associated with ICOs but have discovered that it is a difficult issue for any individual country to address on its own.

Consider the Chinese model as an example of this difficulty: China banned ICOs, but that ban merely sent the activity to neighboring exchanges in Japan, Korea, and Hong Kong.

Meanwhile, the US Securities and Exchange Commission has expressed reservations about initial coin offerings and is looking to regulate the activity. A similar sentiment has been expressed by officials in the European Union, who would also like to see ICOs brought to heel.

Eventually, it’s almost a certainty that transnational regulatory bodies will move in on the heels of governments and central banks. When that happens, there will be a significant shakeout within the cryptocurrency industry. Startups with weak business plans that offer no real innovation or relevant services are going to disappear without a trace. At the same time, companies and projects that rely on actual business savvy and useful technology will rise to new heights. These companies will be the ones that provide genuine investment returns based on their tokens’ ability to provide built-in utility and real value.

Regulations will inevitably play a role in that shakeout as well. Groups that refuse to engage responsibly with financial regulatory bodies are going to find themselves marginalized, viewed with suspicion, and perhaps even criminalized. Given the fact that crypto companies — like many other businesses — rely on investor and user trust, this should be a serious concern.

Fortunately, there are already cryptocurrencies that have adopted a different attitude and approach toward regulation. Take, for example, DNotes. The team behind the DNotes digital currency foresaw that crypto’s future will be dependent on the industry that responsibly complies with all existing laws and regulations. That recognition helped inspire them to create a separate company, DNotes Global, to develop their digital currency, promote it, and protect the currency and its stakeholders. Despite being more time consuming, burdensome, and costly DNotes Global decided to pursue its capital formation path by embarking on two funding rounds — Reg. D 506 © and Reg. A+ Mini-IPO Tier 2, both of which are registered offerings with the SEC under the JOBS Act to facilitate crowdfunding.

Of course, the industry does not need to wait for the regulators to act. There are internal options available to us, as we await pending regulatory action. The industry could voluntarily certify quality through rigorous, independently-verified compliance checks. Such a strategy could do a lot to improve investor safety and use competitive forces to encourage other projects to comply with the same level of certification. That’s certainly not the type of regulation many government officials might have in mind, but it is at least a start — and would go a long way toward demonstrating the industry’s commitment to compliance and investor protections.

Meanwhile, the race is now underway at the governmental level. Regulatory intervention is coming, and the first country that releases the right kind of guidelines will reap huge dividends from an economic standpoint. Appropriate regulations could provide a means to measure long-term viability of ICO projects before they launch, reducing investor risk and the potential for fraud. Proper integration with the local banking systems can help to provide similar safeguards.

In addition, the nation or nations that win the race to create reasonable regulatory guidelines for the cryptocurrency industry will likely attract a host of lucrative international projects. A sound regulatory environment will draw those projects to that country, providing new economic activity and an expanded tax base.

In the end, some regulations are inevitable. Cryptocurrencies may have been conceived as a way to remain outside of the centralized financial system, but it is unlikely that they can ever achieve true mainstream adoption without adhering to some level of centralized regulation. Savvy digital currency projects will accept that reality and recognize that an embrace of thoughtful, responsible regulations represents the fastest and smoothest path to legitimacy and widespread adoption.