Incompetent exchange goes out of business. Said exchange try to compensate their customers. Customers learn better to scrutinize other exchanges for their backup policies and how they run their business.
Of course, this is the free market. Failure to be competent, either as an investor, user, or exchange, result in monetary loss.
To others, this is horrible. To me, this is the way I like it.
I wish for the accurate consequence of my decisions, not a jacked up distorted picture of reality. This prevent crisis from becoming a minor blip in the bitcoin economy into something that fundamental destroy the bitcoin economy.
Adding regulators who have a hold on the whole Bitcoin economy with no alternative for said regulators, with no incentives to for regulators to regulate the market right is a recipe for disaster. You want regulation and regulators? Show me the incentives for them to make things right. Show me why they will not fall prey to regulatory capture. Give me precise details of how this is all suppose to work and what the rules are.