Being interested in tokens for their "features" not the price is very archaic. This also does not happen with stocks anymore: People hold for a few months/days/minutes, then sell, they don't sit on stock for many years like we used to.
My guess: China will allow ICOs after drafting up proper legislation and regulation. It would not benefit China's economy to blanket ban a new emerging technology. They just want to prevent crypto as a way to move money out of China, take a cut of the profit.
Another guess: Regulation will be good for established players (like Ethereum and 2016/2017 ICOs), but bad for speculators and newcomers. It will thus shoot past its intended goal of protecting investors: Those who like to gamble with money they can't afford to lose will find other get-rich-quick schemes unrelated to crypto. In Las Vegas you are actually sure to eventually lose all your money.