Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), has spoken of the advantages of initial coin offerings (ICOs) as a way to raise capital – with a significant caveat.

In a speech last week, focused on reviewing the SEC’s progress in 2018 and discussing the agenda for 2019, Clayton said “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital.”

However, he added that securities rules must be adhered to where appropriate.

“The novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed,” he said.

The chairman further said that the SEC and its staff “have spent a significant amount of time” focusing on blockchain and cypto assets and that is a trend he expects to continue in the coming year.

Clayton continued:

“A number of concerns have been raised regarding the digital assets and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in the traditional equities and fixed income markets, with correspondingly greater opportunities for fraud and manipulation.”

This is not the first time the SEC chief has addressed the issue of potential crypto market manipulation. Speaking at the recent CoinDesk Consensus: Invest conference, he said, “The prices retail investors are seeing are the prices they should rely on, and free from manipulation – not free from volatility, but free from manipulation.”

U.S. congressmen also introduced two bipartisan bills last week in order to prevent price manipulation in the crypto markets. The bills essentially ask the Commodity Futures Trading Commission (CFTC) and other financial watchdogs to come up with a roadmap for better crypto regulation so as to protect investors, as well as to boost the role of the U.S. as a fintech innovator.

In his speech, Clayton also spoke of the SEC’s recently launched Strategic Hub for Innovation and Financial Technology (FinHub), aimed at making it simpler for fintech startups, including those working with crypto assets, to navigate the legal implications of their products.

“As the FinHub and our other activities demonstrate, our door remains open to those who seek to innovate and raise capital in accordance with the law,” he said.

Jay Clayton image via CoinDesk archive