The U.S. Securities and Exchange Commission (SEC) has issued a warning to investors regarding the potential risks associated with investing in crypto asset securities.

The agency’s Office of Investors Education and Advocacy has urged investors to exercise caution when trading on platforms that may not be complying with federal securities statutes.

In a bulletin issued on Thursday, the SEC reminded investors that parties involved in the trading of securities such as securities broker-dealers, investment advisers, and exchanges are required by law to register with the SEC, state regulators, or self-regulatory organizations.

The agency also noted that entities and platforms involved in lending or staking crypto assets may be subject to federal securities laws.

The SEC has previously highlighted that many crypto exchanges may be operating as unregistered securities exchanges in the U.S. The agency’s Chair, Gary Gensler, has been vocal about this view.

The regulator’s warning comes just a day after Coinbase, a leading cryptocurrency exchange, disclosed that it had received a Wells notice from the SEC. This indicates a possible imminent enforcement action tied to its listing of potentially unregistered securities.

The news hit Coinbase’s Nasdaq-listed shares hard, causing them to slump as much as 20% in early trading on Thursday. However, at the time of writing, they have recovered around half of their losses, down 10% at $69.32.