I wonder if this will end with people going to prison for securities fraud?
Right now a lot of people are making the mistake of investing in an ICO that they don't understand. Like with any kind of investing; it's their responsibility to do their research. What will happen at the end of this is what happens normally in the financial world; smart people who understand each currency are going to make money at the expense of wealthy but poorly informed people who are randomly pouring their money all over the place trying to make a quick buck.
Moreover, a lot of the money that goes into these ICOs ends up funding open source projects that are either directly or indirectly related to the cryptocurrency itself (and this helps the entire industry as a side-effect).
Sure, there might be some black market money involved but I think that at least much of that money will be put to good use. It's the government's job to track people who are using the platform for illegal means.
If somebody buys chemicals to make illegal drugs, it doesn't make sense to arrest the chemists for manufacturing the chemicals. The chemicals can be used for good and bad; if you sum everything up and the net result is a positive change for society, then overall it is a good thing.