Great discussion, the heat feels very real, especially with some of the concerns raised on the latest mumble, dev hangout. Perhaps this will be the main discussion in 2015: how to balance regulation with decentralized freedom. Personally I hope existing infrastructure that wants to deal in IOUs will be fine with bitAssets existing on the same network, and again that regulators will be fine with this, which is an open question. Creating two chains might be what we will see, but then what will happen. There are a lot of things to think through in this area.
Bytemaster and I pretty much agree. We should focus on making a self regulating blockchain as much as possible while preserving liberty for our base.
Institutional adoption requires an appeal to security and regulation features. People dealing with large amounts of money (millions, billions, and trillions) are most concerned with keeping their money safe, and keeping their legal risks low. Bitshares will have to develop features which make it safer than traditional means of securing wealth. At the same time it will need to develop features so that it's able to self regulate to the extent that external regulators don't have any excuse to mess with our community, the developers, or the technology.
The people who wish to use Bitshares in regulated mode should be able to use the same blockchain as the people who wish to use it in unregulated mode. I don't agree with the recent push by governments to outlaw cash but I am guessing that is coming about specifically because the liberty crowd behind technologies like Darkcoin and Slur have pushed things a bit too far.
My opinion is we should protect liberty as much as possible without sacrificing security or mainstream adoption. Very tough because mainstream adoption wants security primarily and then liberty while early adopters want liberty primarily and then security. The holy grail is to have both on the same chain and I think with Turing complete scripting you can do it on a single chain.
http://qz.com/399531/denmark-hopes-to-boost-its-economy-by-eliminating-cash/