They definitely CAN regulate crypto, I think what you mean is that the regulation will be ineffective for those who care to get around it, which I would argue is the case for a lot of existing regulation (such as drugs, like you pointed out).

Regulation just means telling companies what they can and cannot do when it comes to cryptocurrencies. Specifically, it will most likely be telling any exchanges that operate in the US that they cannot list a large number of the tokens they are currently listing, and then that will tell other US institutions what cryptocurrencies the government says that it's ok for them to invest in.

Regulation is much more of a corporate thing than an individual thing.