Good. The first step to establishing a regulatory framework is defining boundaries of acceptable behavior by shutting down egregious violations.
ICOs like this are trying to defraud and scam people, making them believe that their token is something it's not.
I don't think any honest investor and/or developer wants the second case to be unregulated, nor gains anything from it being so.
If anything, regular cryptocurrency enthusiasts are loosing because of this, because the whole crypto space gains bad notoriety because of these ICOs, and people who cannot tell a difference between ICO, an ERC20 token, a private address, bitcoin, bcash, litecoin, etc, etc - people who think they are all the same - will just form a faulty opinion that since there are scam ICOs out there, that means that the whole crypto space is a scam. Everyone would win if these scams were regulated and punished.
You can simultaneously hate scam ICOs and still not want most other aspects of cryptocurrencies to be regulated. There are lots of different regulations that different people find acceptable.
The innovation also might also shift political attention to some drawbacks with the current regulatory regime that could use updating - for instance the rather blunt instrument of the accredited investor regime, or the custodian requirement.
And the regulators will have to deal with changes to their own incentive structures - for instance the opportunity for regulatory arbitrage.
For all the mistrust of banks and regulators in Bitcoinland, having those institutions take you seriously is what winning looks like.
I personally think that cryptocurrencies could do for a lot more regulation, not just from governments but also from public advocacy groups. We need to be carful about the kind of regulations.