Beijing, 12 (Xinhua)-- Jay Clayton, chairman of the Securities and Exchange Commission (SEC), warned on Monday that investing in cryptocurrencies is risky and that emerging asset classes such as trading and public offerings may violate federal securities laws, Reuters reported.

Clayton's announcement came hours after SEC halted the "first token issue" (ICO) of a restaurant review app. The restaurant review app had previously failed to register it as a securities.

ICO allows start-ups based on cryptocurrency technologies such as blockchain to raise money quickly by issuing virtual tokens to investors. Such issuance has become more common over the past year, but since the market is largely unregulated, there is little data available.

According to SEC officials, Monday's enforcement action is significant because it suggests that SEC will intervene to deal with ICO with registration violations, even if there are no fraud charges.

"the cryptocurrency and ICO markets have raised some concerns, including that they are far less protective of investors than traditional securities markets, and the chances of fraud and manipulation are correspondingly greater. "said Clayton.

In a statement, he warned investors: "if an opportunity sounds too good to be true, or if you are under pressure to act quickly, be extremely careful and understand the risk of losing money on your investment." "

Clayton also warned industry professionals that in many cases ICO is required to comply with federal rules on securities offerings, including registration with SEC or exemption from private offerings to qualified investors.

He also pointed out that many cryptocurrency trading platforms may also violate regulations requiring them to be registered as exchanges or alternative trading platforms.