The $2 billion e-cigarette industry may be in for its toughest challenge yet given a new study that claims they do give off a vapor-based carcinogen and are not the greatest alternative to the traditional tobacco product as some may think.

A study to be published in the journal Nicotine and Tobacco Research reveals formaldehyde is part of the vapor inhaled by users and it's a known carcinogen that's also released in cigarettes.

"Looking at ingredients is one thing, and very important," said Maciej L. Goniewicz, who led the study. "But to have a comprehensive picture, you have to look at the vapor."

The e-cig industry has long proclaimed it's a viable and safe smoking device that gets rid of the second-hand smoke concern and offers smokers a healthier product.

But in the past year the device has been subject to scrutiny by federal regulators and the Food and Drug Administration is seeking to develop new rulemaking that will give it control over the product, like it has with tobacco products.

"Tobacco remains the leading cause of death and disease in this country," said FDA commissioner Margaret A. Hamburg, M.D. in a press release. "This is an important moment for consumer protection and a significant proposal that if finalized as written would bring FDA oversight to many new tobacco products."

Two cities now ban public use of e-cigarettes. Chicago followed New York last month, enacting a ban that outlaws smoking the vapor devices in any indoor place. New York enacted its law late in 2013. New York enacted its tobacco smoking ban back in 2002.

A new report recommends the FDA begin regulating e-cigarettes and prohibit the sale to anyone under 18, ensure advertising is appropriate and ban e-cigarette advertising on radio and television.

Meanwhile the FDA is proposing a new rule that would allow it to regulate e-cigarettes and is seeking public comment on the rulemaking proposal. It would also require e-cigarette makers to have warning labels on the smoking devices.

According to the Centers for Disease Control and Prevention the number of middle and high school students using e-cigarettes more than doubled from 2011 to 2012, which represents 1.8 million students across the country, according to CDC Senior Adviser Brian King.

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