While at first glance, the United States Securities and Exchange Commission appears to be vehemently opposed to initial coin offerings (ICOs) considering their hardline stance against ICO promoters in recent weeks. However, according to SEC Chairman Jay Clayton, ICOs can be an “effective” fundraising tool.

“I believe that ICOs can be effective ways for entrepreneurs and others to raise capital,” Clayton said in a speech highlighting the watchdog’s 2018 regulatory agenda and the progress they’ve made thus far.

Clayton explained that due to the cryptocurrency market – and more specifically the ICO market – having less investor protections, there is a greater risk for “fraud and manipulation” than what exists in traditional markets such as equities. These are concerns that the SEC intends to address, and has been addressing in recent weeks.

The SEC has been cracking down on fraudulent ICOs and their promoters over the last few months. In one recent example, boxing icon Floyd Mayweather and Hip-hop performer DJ Khaled were fined as a result of their involvement in promoting an ICO that scammed its investors out of their money.

Clayton adds that in order for ICOs to be “effective” as he suggests, the SEC’s securities laws must be followed,” despite the “novel technological nature of an ICO.”

The SEC has been among cryptocurrency’s biggest adversaries, preventing a number of Bitcoin ETF proposals, and causing great uncertainty around which cryptocurrency tokens could be deemed a security, and therefore fall under securities laws as Clayton points out.

Earlier in the year, Clayton went on record to clarify that Bitcoin was not deemed as a security under U.S. law, nor was Ethereum due to the way they are decentralized and have no central controlling authority.