I find it odd that China banned all cryptocurrencies but Bitcoin 2 weeks ago and that now a Chinese Bitcoin exchange is closing. China's position is still unclear at the moment and it seems to be what's making or breaking the BTC market.
Local bitcoins is already out there and if those get blocked by the great firewall of China, alternatives will pop up soon enough.
Also the ICO environment is littered with complete utter garbage and I can see lots of people getting burned when jumping in uninformed, which seems to be happening on an accelerated pace these days.
Why do you think they have to do it in a "whack a mole" type of way?
It's not terribly difficult for one government to establish "best practices" and then ban all cryptocurrencies and/or ICOs that don't strictly adhere to it.