I'm certain that they will not face the wall of a prison cell. The pronouncement about banning ICO and closing exchanges is not pointed to citizens of that country but to marketing side. You can still buy bitcoin, Chinese friend of mine told me but through other means. And I think china just want to regulate this kind of investments for they're people's protection from scammed ICO.
That's what I thought at first too. There was even an article where a Chinese official indicated that ICOs would be allowed once proper regulation is in place. However, reputable sources say there is more to come from the Chinese government re: cryptocurrency regulation in the short term, and that we haven't seen the worst.
Prominent VC saying that
all OTC trading is going to be banned. No legal exchanges or OTC trading means crypto trading will go fully underground. And what could that mean for China's mining industry?