With financial markets abuzz about cryptocurrencies and initial coin offerings (ICOs), the chairman of the U.S. Securities and Exchange Commission (SEC) is encouraging investors and industry professionals to remain cautious.

“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation,” says Jay Clayton in a statement published on Monday.

Clayton stresses that, so far, there haven’t been any ICOs registered with the SEC, and the commission hasn’t approved any exchange-traded products (such as ETFs) that hold cryptocurrencies. “If any person today tells you otherwise, be especially wary,” he warns.

He also advises investors to read the SEC’s many alerts, bulletins and statements on ICOs and cryptocurrency-related investments. “As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost,” he says.

Clayton calls on industry professionals to ensure they understand the SEC’s position on when an ICO will be considered a security. “Replacing a traditional corporate interest recorded in a central ledger with an enterprise interest recorded through a blockchain entry on a distributed ledger may change the form of the transaction, but it does not change the substance,” he says. “I also caution market participants against promoting or touting the offer and sale of coins without first determining whether the securities laws apply to those actions.”

Similarly, whether cryptocurrencies count as securities will depend on the characteristics and use of the particular asset, he notes.

“I have asked the SEC’s division of enforcement to continue to police this area vigorously and recommend enforcement actions against those that conduct initial coin offerings in violation of the federal securities laws,” he says.

The head of U.S. derivatives regulator, the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, issued his own statement backing Clayton. Securities and derivatives regulators “are in regular communication” on the issues raised by ICOs and crypto currencies generally, Giancarlo says.

“Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. Investors should be aware of the potentially high level of volatility and risk in these markets,” he adds.

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