Over the past two decades, online commerce has become one of the main ways of doing business. Virtual payments are made simply and quickly by filling out simple forms and making a few mouse clicks. Funds are almost immediately transferred from bank cards and are received on the accounts of companies, then the goods and services are delivered to the customers by mail or in person. However, along with all the apparent perfection of such transactions, they are still under control of banking institutions, which implies a number of limitations.

Fortunately, progress does not stand still and traditional currencies have been replaced by a cryptocurrency - a virtual form of currency that uses blockchain technology and has decentralized nature. In other words, digital coins are a confidential financial system that allows making remittances without information leakage. Thus, an alternative to the use of credit cards and bank accounts to pay for goods and services today is the use of cryptocurrency, and Bitcoin is the most famous version of it.

Accepting payments in Bitcoin has a wide range of advantages for both online stores and offline sales.
Certainly, the decentralized nature of Bitcoin means that everyone can start accepting payments using this innovative system without requiring an account from a third-party provider. But it’s easier, cheaper and safer for many enterprises to pay a small amount to a professional payment processor.
One of the most popular services provided by these payment processors is the instant conversion of Bitcoin (BTC) into the required currency (for example, USD). This possibility is very important, since most businesses that accept Bitcoin payments still have to pay all their own expenses or, for example, buy shares using common financial resources (currencies), and the changes of exchange rate between Bitcoin and local currency may lead to losses.

In addition, payment processors provide you with all the tools you need to accept payments in Bitcoin as easy and convenient way as possible, without need to develop your own software solution.

In this article, I am going to tell about some popular payment processors of Bitcoin. The following payment processors have been selected based on the range of proposed functions, the cost of their use (lower than the cost of credit card payment processors), as well as their reputation for reliability and fair business practices.

First of all, ask yourself a question: what is the main reason that you would like to accept payments in Bitcoin? The most popular answers are the following:

  • To reduce the business costs associated with accepting payments on credit cards.
  • To attract attention and customer loyalty from the created community of Bitcoin enthusiasts.
  • To attract the attention of the media.
  • Because I believe that the world needs Bitcoin.
  • My clients asked me.

So, let’s get down to a brief description of some payment processors.

BitPay
Bitpay offers one, if not the most complete solution for the sellers who want to integrate the Bitcoin processing into their existing operations.
The company offers a wide range of “plugins” for existing programs for the purchases, including Magenta, OpenCart, Zen Cart, X-Cart, WordPress (Woocommerce, E-Commerce, etc.), Drupal Ubercart and others. Therefore, if you already have a store that works with any of them, the integration of payments into Bitcoin is very simple. If you are just starting business, then cooperation, for example, with Shopify will allow you to create a new store that accepts Bitcoin payments.

Merchants using BitPay can instantly convert all or part of their revenue from sales to another type of currency, including USD, EUR, GBP, CAD, and others. Payments are received daily on your bank account. You are charged a monthly fee for the use of BitPay services, but there is no additional commission for the transaction, therefore, for example, you receive 1 US dollar paid to your bank account, for every $ 1 paid by your customers.

Cryptopay
Cryptopay is, first of all, a European service for buying and selling Bitcoin for euro or GBP, but the company also offers a good solution for the merchants.
The difference of Cryptopay is that the system includes a sales application by reading a QR code.
In addition, the websites that accept donations have the option of integrating the “pay now” button, that is very easy to use.

GoCoin
GoCoin offers traders the opportunity to accept payment in Bitcoin or Litecoin.
This allows to integrate easily into existing sites, using different choice of plugins for popular software products for such stores as Magenta, PrestaShop, OpenCart, WooCommerce and many others. In addition to it, there is an API for the developers who want to build their own solutions.

It should be noted that at the moment the market of the companies accepting payments is quite large and it keeps on growing. Thus, anyone can choose the proposal that suits his activity best.

ICO (Initial coin offering) is a form of attracting investments in the form of selling a fixed number of new units of cryptocurrency, received with a single or accelerated emission.

In the middle of November, the European financial regulators, including ESMA (the European Securities and Markets Authority), the Belgian FSMA (the Financial Services and Markets Authority) and the Dutch AFM (the Authority for the Financial Markets), issued warnings about risks for the investors and rules applicable to the companies participating in the ICO.

The market of so-called cryptocurrencies has heated up. The approximate total market capitalization of all cryptocurrencies has increased from $ 18 billion in early 2017 to staggering $ 200 billion by the time of writing this article. Needless to say, some people were worried about this hype, and not only the European financial regulators.

ICO is the key concept of cryptocurrency as a type of “crowdsale” (“crowd” and “sale”) where the project developers offer a new type of cryptocurrency (also called “token” or “coin”) using the distributed ledger technology. Cryptocurrency can acquire various characteristics based on the purpose of a particular project: they can be designed for use, in particular, as money resource/virtual money, as a financial instrument or as a means of providing access to a product or service.

Investors are warned about the unregulated character of the space, which is vulnerable to fraud or illegal activity, about high risk and instability of the cryptocurrency rate, as well as the lack of information.

In addition, the companies participating in the ICO are reminded of their obligations under the European financial legislation. The following regimes may be applied to the ICO: the Prospectus Directive, MiFID (The Markets in Financial Instruments Directive), AIFMD (The Alternative Investment Fund Managers Directive) and the 4th EU Anti-Money Laundering Directive. Depending on how the ICOs are structured, they can go beyond the existing rules and, therefore, be outside the regulated space. However, if token coins are classified as financial instruments, it is likely that the companies participating in the ICO carry out regulated investment activities, such as placement, implementation or consulting on financial instruments, management or marketing of collective investment schemes. Each of the ICOs should be evaluated in each particular case, for the purpose of getting into one or a few of the above modes (or any other regulatory regime).

These notifications of the European financial regulators may signal the long-expected start of an extended review of regulatory standards in the cryptocurrency market.

Legal regulation of blockchain. Latest changes and prospects for the development of legislation

Blockchain Technology is a developing technology on which basis new applications in the field of finance appear daily. Regulators of some countries have already reported their intentions to study the use of blockchain technology, which is also called distributed ledger technology (DLT).
The new technology is potentially attractive to the regulators because of the increased level of transaction security and risk reduction of manipulation, but, at the same time, it creates complex legal problems that regulators are trying to understand and resolve. In this article, we will try to make a brief analysis of the approach of regulatory authorities to blockchain technology.

Regulation in the USA

The regulators in the USA are seriously monitoring the development of blockchain and other DLT (as well as cryptocurrency, in circulation on the basis of such registers). Some express concern about their impact on financial stability and market integrity.
At the same time, the US Securities and Exchange Commission (SEC) is actively exploring the potential possibilities of the use of blockchain and other DLT for financial transactions on the securities market.
Another regulator, which also studies how blockchain and other DLT can be used in the derivatives market, is the Commodity Futures Trading Commission (FCTC). The Technical Support Committee of the SEC, back in April 2016, noted that the lack of single standards in the industry is the result of the fact that Blockchain and the remaining DLT are still in their infancy and their implementation will be gradual.
The US Financial Crimes Enforcement Network (FinCEN) is a regulatory organization that publishes administrative regulations and interpreted guidelines for virtual currencies and blockchain. Thus, for example, the FinCEN has issued a guideline according to which online brokerage operations with precious metals conducted with the use of blockchain are the subject of regulation in accordance with the provisions on remittances.
In addition, recently the Office of the Comptroller of the Currency has informed in its semi-annual report on risks that virtual currencies provide anonymity to cybercriminals, including terrorists and other groups of individuals who seek to transfer and launder funds.
Other US government agencies, such as the Federal Trade Regulatory Commission and Bureau for Financial Protection of Consumers, apply coercive measures and issue regular warnings to consumers regarding the risks with bitcoins and virtual currencies in general.

Regulation in the European Union

The European Securities and Market Authority (ESMA), which is the main regulator for all National Securities Commissions in Europe, published a document in June 2016 entitled “Application of Distributed Ledger Technology for securities markets”, which outlined the potential risks and the benefits that DLT may have in the securities markets, especially in the view of public policy.
The UK Financial Services Authority (FSA) is actively involved in the financial and technological part, participating in the development of a regulated financial and technological test operating system. This approach has been mostly used to observe how the technology develops. So, already in April, 2017, FSA published a document “Discussion materials on the issue of distributed ledger technology”, in which it calls for commenting on risks, giving feedbacks on the use and prospects for the development of distributed ledger technology in the financial sector. In this document, the possibility of using DLT is considered in the context of database models of common (joint) use of cryptocurrencies, digital assets trading and primary placement of cryptocurrencies, among other things, regarding how regulation should be applied to the users, based on the continuous development of technology.

Regulation in Ukraine

In Ukraine, the legal regulation of distributed ledger technology has not been conducted yet. At the same time, the head of the National Bank of Ukraine stated that the NBU is not able to recognize cryptocurrency as a currency due to the absence of a central regulator. The head of the National Commission for Securities and Stock Market supported the idea of ​​the head of the NBU and noted that “cryptocurrencies do not have information support and, especially, protection of investors’ rights”.

Prospects for the development of legal regulation of the sphere

It is absolutely clear that regulators will continue to monitor further the development and use of distributed ledger technology in the regulated sphere. Previously, they tried to avoid the regulation of technologies as such and paid more attention to their use and products that could be promoted or developed on a technology platform.
While the market monitors potential regulatory changes, the effective management is key to the successful implementation of DLT to protect participants, investors and stakeholders, while ensuring the sustainability of the system to systemic risks, confidentiality concerns and cyber security threats.
The direction of development of the normative approach is still not clear, but generally the industry should monitor the applications to which blockchain can be applied and avoid products and processes that are illegal or may cause systemic risks. Otherwise, we can expect that strict regulation will limit the future development of technology and the benefits that it can provide.

After conducting a series of consultations with the public and interested persons, technical studies and assessments of the financial and economic consequences, the Government of Malta intends to carry out a full reform of the current legislative framework regulating gaming activities.

The proposed reform implies the abolition of all current legislation regulating gaming, and the introduction of a single law - the Gaming Act. The law will enable the competent minister to publish the rules and also give authority to the relevant regulatory body (Malta Gaming Authority - hereinafter “MGA”) to publish the Directives and other regulations if necessary, thereby ensuring timely and flexible interventions, especially with regard to technical specifications and processes.

Инфографика

Within the framework of optimizing the supervision and modernization of the existing gaming infrastructure, the main state priority in the gambling sphere will be the flexibility of the regulator in the decision-making process and the reduction of the unnecessary regulatory burden, as well as the simultaneous strengthening of supervision in the spheres of the highest risk.

One of the main changes in the course of the reform is the replacement of the current cumbersome system with many types of licenses for a system consisting of only two types of licenses: “business-to-consumer” (B2C) and “business-to-business” (B2B), which will cover different types of activities on several distribution channels. It is expected that this simplification in the licensing system will allow MGA to allocate more of its resources for continuous monitoring of the licensor’s activities for compliance with requirements.

Инфографика


Инфографика

Other changes include:

  • acceptance of the objective instead of an excessively prescriptive normative approach which will ensure the development of innovations;
  • expansion of the powers of MGA in accordance with changes in the sphere of combating money laundering and financing of terrorism;
  • segmentation of officials on key functions within the licensed activities and ensuring the competence of such a person through certification, relevant experience and continuous professional development;
  • strengthening the protection of players by formalizing the intermediary role of the MGA player support department, assigning of allocation of players' funds and transfer to a single database;
  • introduction of new and more effective criminal and administrative proceedings that allow regulated organizations and individuals to appeal against decisions of MGA in the Chamber on reconsideration of decisions of administrative bodies through a judicial procedure based on the principles of natural law, as well as the introduction of distinction between administrative and criminal offenses;
  • introduction of administration system for the operators experiencing difficulties, as well as facilitating the closure of gambling projects (if necessary) to protect workplaces and players’ funds;
  • transition to automated reporting which will promote the observance of regulatory obligations and increase of the supervision of authorized bodies;
  • strengthening the role of MGA in combating manipulation in sports competitions by introducing new obligations for the operators to monitor and identify suspicious sports bets in accordance with the actions of the National Anti-Corruption Committee, in which MGA also actively participates;
  • extension of the license validity period from 5 to 10 years, provided that certain games offered within the framework of state concession are used;
  • rationalization of taxation by combining the two main levels into one stream;
  • exemption of B2B operators from gambling tax (which makes up to 5% of gambling profits from the players in Malta), which will increase Malta's competitiveness as a center for such operators.

It is also interesting to know the attitude of MGA to the use of cryptocurrencies in gambling. Realizing the need to keep up with the times, the body is committed to allow its licensees to use cryptocurrency in the near future. However, remembering about the risks, MGA has conducted an appropriate study to develop adequate legal frameworks and restrictions, including the appropriate requirements of the 4th EU directive on prevention of money-laundering, which will also be amended on the introduction of provisions on cryptocurrencies in the near future. The main results of the study will be submitted for public discussion, which will be held in the fourth quarter of this year, according to which results the necessary requirements and restrictions will be established.

At this stage, MGA is completing the Gaming Act and the relevant by-laws in accordance with the results of the conducted studies and public consultations. Further, this package of legislation will be submitted to the Government of Malta to initiate a parliamentary process for its approval. In addition, MGA promises to ensure an adequate transition period and to supplement the legislation with the provisions providing a smooth transition to the new regulation rules after the reform enters into force.

The technology of the distributed registry gives the potential to the companies in different spheres of activity to enable them to work more efficiently, create new business models and launch innovative products. But, naturally, the reasonable question arises: will the technology "Internet finance" be able to justify the arisen agiotage?
The Distributed ledger technology (hereinafter referred to as DLT), also known as Blockchain, refers to the innovations that can offer a tremendous potential to the large companies for more efficient operation and better customer service but it is not sufficiently developed yet for such applications.
The Distributed registries are common databases that contain digital lists of the transaction records. Their unique feature is that the identical copies of the registry are "distributed" between several hosting and information storage servers (hosts) that check transactions written in the form of "packages" by means of the agreed process. After checking, the "packages" are blocked with a cryptographic "hash" or an alphanumeric string of the fixed size, which allows the hosts to check incoming data but does not allow data recovery.
Conceptually, the cryptographic distributed registries are similar to peer-to-peer networks, or so-called credit platforms, in which the intermediary is useless and therefore replaced by the technology. The transactions can be made instantly and directly between two contracting parties, creating an unchanged record and, theoretically, eliminating the risk of not making the calculations and settling differences with the system. The registry also minimizes the probability of fraud, as it allows you to track the history of the origin of the assets and the history of transactions in a single source of reliable data.
As in the case of any other advanced technology, the development of the Blockchain is accompanied by agiotage. Many large financial institutions pay significant attention to the potential of the Blockchain, and some even invest in the innovative laboratories, start-ups or "sandboxes" (so-called test environments where the developers are given the opportunity to test the software in a safe environment).
Nevertheless, despite the agiotage, the Blockchain also has sufficient support. Thus, at the International Economic Forum, which is held every year in Davos, it was noted in the report for the previous year (2016) that the Blockchain "justifies the agiotage" and "forms the basis for the infrastructure of financial services of the next generation".
Perhaps the most notable and well-known application of the distributed registry technology is the Bitcoin payment system, which was launched in 2009. The distributed Bitcoin database contains a report on each transaction using crypto currency, which market capitalization has grown dramatically in the recent months and reached almost $ 35 billion in May, 2017. Such growth shows the growing recognition of Bitcoin as a payment method, but at the same time it generates the gossip that it can be an artificial inflation of the economic growth.
The use of distributed registry technology by the companies (on the example of the insurance services market)
Taking into account the potential, that the distributed registry technology provides, it is not surprising that some companies have launched an initiative to estimate the value or develop jointly the programs. For example, in October 2016, Aegon, Allianz, Munich Re, Swiss Re and Zurich launched the Blockchain Initiative B3i which implies involving insurance companies in joining an industry group to investigate the potential of the distributed registry technology. The group agreed to launch a pilot project using anonymous information about transactions and anonymous quantitative data, in order to conduct research to confirm the mechanism of action of intergroup retrocession (reverse concessions).
Another direction of the development is a broader interaction between the main players in the insurance services market and IT companies. Such a joint approach will allow to pursue not so much revolutionary but evolutionary development policy and testing in this sphere, which, according to the expectations, will lead to the standards of suitability for sharing.
Certainly, there is a feeling of overwhelming excitement around the potential for a more efficient and safer business infrastructure for the activities of the companies. Nevertheless, despite the promises, at the moment the distributed registers are only a small part in the technological environment of the insurance. Very little investment has been promoted beyond the evidence of the concept, and there are serious questions relating to whether the registries will be able to cope with the volumes which are necessary for the operation of the modern insurance markets.
Newbies fighting
In the conditions of the constant development, the new market participants also strive to use the capabilities of cryptographic distributed registries. Among the most famous is the start-up Everledger, which uses the advanced technologies, including Blockchain, smart contracts and automated information analysis to help reduce fraud risks for banks, insurers and open markets; as well as the Plex.ai project is an automated telematics platform that uses the Blockchain technology, artificial intelligence and machine learning to provide insurance for the cars with autopilot. The InsurETH project allows you to purchase insurance against flight delays using the Ethereum smart contact system. The insurance payments are registered as a smart contract transaction, and the compensation is granted based on the provisions of the contract.
Startups
Startup projects have the opportunity to gain the access to the Blockchain technology for a relatively small fee, having built their solutions on such platforms as Ethereum, for example. Thus, the start-up Dynamis builds the contracts on the base of the Ethereum platform for the equal insurance contracts. This company also develops contracts for additional unemployment insurance, using the social network LinkedIn as a reputation system. The applicants for a new policy can use the data entered in LinkedIn to verify their identity and employment status, and the claimants can use their LinkedIn connections to validate that they are looking for work.
In conclusion, it should be noted that technologies have changed an uncountable number of industries, and the next technological revolution seems to be aimed at digitizing all the industries, including the financial services industry. As a result, digital technologies are increasingly penetrating every stage of the financial services. So, right now, the transactions conducted using Blockchain technology, leave a trace on the web forever and give the opportunity to track every move. All the data can be copied, but there is no possibility to edit which minimizes the possibility of fraudulent schemes.
Probably, in the near future most transactions will be conducted using Blockchain technology which will significantly reduce time costs and secure the contract parties from fraudulent schemes. In the meantime, we will be monitoring the development of the technology and monitoring the regulatory news of this relatively new but very actively developing technology.

The developers, businesses and ordinary people are increasingly using the Initial Coin Offering, which is also called the ICO or the sale of tokens to raise capital. Such activities provide fair and legitimate opportunities to attract investment. Nevertheless, new technologies and financial products related to the ICO can be misused to attract investors with the promises of high profitability in the new investment space.

Providing this material, we begin a series of articles on crypto-currencies in order to acquaint you with the current issues of regulating a new and actively developing sphere of investment.

Virtual coins or tokens are created and distributed using the distributed registry technologies or distributed storage of reliable records (blockchain technology). Recently, the sale of virtual currency through the ICO is more and more popular. The buyers (investors) can use funds to purchase money (for example, US dollars) or virtual money to buy virtual coins or tokens. The creators (promoters) provide the buyers with the information that the capital raised from the sales will be used to finance the development of the digital platform, software or other projects of this kind, and that virtual coins or tokens can be used to access the results of development, their use or for any other type of participation in the funded project. However, the authors of unsuccessful projects that did not collect the necessary funding must return the invested funds to their owners. After the issue, the virtual coins or tokens may be resold to other persons in the secondary market, virtual currency exchanges or other platforms.

Depending on the facts or conditions in each individual ICO, virtual coins or tokens that are offered or sold can be treated as securities. Thus, the US Securities and Exchange Commission (hereinafter - the Commission) in its most recent investigation report in accordance with paragraph 21 (a) of the Law on Securities Trading of 1934 determined that if virtual coins or tokens are securities, then the offer and sale in the procedure of ICO is subject to regulation in accordance with the federal legislation on the securities.

In its report of July 25, 2017, the Commission described the investigation of the activities of the virtual organization DAO (Decentralized Autonomous Organization) and its use of the technologies of the distributed registry and blockchain to simplify the offer and sale of the DAO tokens to increase capitalization. The Commission applied the existing federal laws of the USA to the new concept, having established that the DAO tokens are securities. It should be noted that those who sell and offer securities in the United States are required to comply with the existing federal securities laws, regardless of whether these securities are purchased in virtual currency or distributed using blockchain technology.

In order to bring a little clarity to this new and complex sphere, we will consider the basic concepts that should be understood if you wish to invest in crypto-currencies or tokens.

What is blockchain?

Blockchain is an electronic distributed register or list of records, very similar to the ledger, which is supported by various participants in the computer network. The system uses cryptography to process and check the transactions in the list, providing the existing and potential users with the assurance that the records are protected. The most famous examples of blockchain are Bitcoin and Ethereum, which are used to track the transactions in bitcoins and ethers, respectively.

What is a virtual currency (crypto currency), a virtual token or a coin?

Virtual currency is a digital representation of values ​​that can be sold digitally and they function as a means of exchange, units of account or means of accumulation. Virtual tokens or coins may also represent other rights. Consequently, in some cases, tokens or coins will be considered securities and cannot be legally sold without registration in the Commission or in accordance with exemption from registration.

What is a virtual currency exchange?

Virtual exchange of currencies is a person or organization that exchanges virtual currency for real money, funds or other forms of virtual currencies. Virtual currency exchanges usually charge a fee for their services. Secondary trade in crypto currency can also be made at the exchange. This may be an unregistered exchange of securities or an alternative trading system governed by the securities laws. Accordingly, when buying and selling crypto currency, you may not have the protection that is provided in case of acquiring shares listed on the exchange.

Who issues virtual tokens or coins?

Virtual money is issued by the virtual organizations, or other companies on attracting investment. A virtual organization is an organization embodied in the computer code that runs on a distributed registry or in a blockchain. The code, often called “a smart contract”, serves to automate the certain functions of the organization that may include the release of certain virtual coins or tokens. The above DAO is an example of a virtual organization.

The key points that need to be considered when deciding whether to participate in the ICO (for example, the United States)

If you intend to invest in the ICO, below you can find what needs to be considered when making a decision.

  • Depending on the circumstances, the proposal may contain an offer and sale of securities. If this occurs, the offer and sale of the virtual currency must be registered by the commission or conducted as such that are not subject to the registration. Before investing in the ICO, ask the developer if the virtual coins or tokens are securities and whether the proposal is registered in the Commission. When registering, you need to remember a number of important points.
  • if the developer claims that the proposal does not require registration, and you are not an accredited investor, you need to be very careful - most exceptions have net worth or income requirements;
  • although, the ICO is sometimes described as crowdfunding contracts, it is possible that they are not offered or sold in accordance with the requirements of the Crowd Funding Regulations or with federal securities laws in general.
  • Find out what your money will be used for and what rights you get from virtual coins or tokens. The developer must have a transparent business plan, which you can read and understand. The rights that are granted to you as the owner of tokens or virtual coins should be clearly stated in this document. Also, you need to make sure that you can get your money back, if you want. For example, find out if you have the right to return a coin or token of the company or receive a refund. Can you sell your coin or token? Are there any restrictions on the resale of coins and tokens, etc.?
  • In the event if a virtual token or coin is treated as securities, the requirement is set by the federal or state legislation of the US: the professionals in the sphere of investments and firms that offer, participate in the transaction or advise on investment issues should get licence or be registered.
  • Ask whether the blockchain is open and public, whether the code has been published and whether the digital security audit has been conducted.
  • Scammers often use innovations and new technologies to enforce fraudulent investment schemes. Scammers can attract investors by advertising the ICO's investment "opportunities" as a way to join this ultramodern space, promising or guaranteeing high investment returns. The investors should always be suspicious of non-transparent sites, solid sales and promises of disproportionate profits. In addition, it's relatively easy for the people using blockchain technology to create the ICO that looks impressive, even if it's actually a scam.
  • The virtual currency exchanges and other organizations that hold crypto-currencies, virtual tokens or coins may be subject to fraud, technical malfunction, hacking or malicious software. There are also cases of theft of crypto currency by the hackers.

Investing in the ICO can limit your ability to return funds in case of fraud or theft. Despite the fact that you will have the rights in accordance with the federal securities laws, your ability to return investment can be significantly limited.

If you or a company that issues crypto currency, becomes a victim of a fraud or theft and lose tokens, coins, other virtual or even real money, the possibility of refunding your funds can be severely limited. You should also pay attention that third-party "wallets," payment systems and virtual currency exchanges, which play an important role in the use of crypto-currencies, may be abroad or act illegally.

The law enforcement officers may face special problems when investigating the activities of the ICO and, as a result, the means of protecting investors will be limited. Among the main problems are:

  • Tracking money. Traditional financial institutions (for example, banks) are often not associated with the ICO or transactions in virtual currency which makes it difficult to track cash flows.
  • The international component. The ICO, transactions with virtual currency and the users cover the whole world. Although the Commission regularly receives the information from abroad (for example, through cross-border agreements), there may be limitations on how it can use this information, and it may take more time to obtain it. In some cases, the Commission may simply not be able to obtain the information from the individuals or organizations located abroad.
  • Absence of a central regulatory body. Since there is no central authority that collects the information about virtual currency users, the Commission should generally rely on other sources for this type of information.
  • Freezing or providing a virtual currency. The law enforcement officers may have difficulty with freezing or investor funds that are stored in virtual currency. The virtual currency purses are encrypted and, unlike the money stored in a bank or brokerage account, virtual currencies cannot be held by the outside keeper.

Be extremely careful if you find any of the following potential signs of investment fraud.

  • "Guaranteed" high investment yield. There is no such thing as a guaranteed high investment yield. Be careful with someone who promises that you will get profit from your investment, with little risk or no risk at all.
  • Offers without obligations. Sales without obligations can be a part of a fraudulent investment scheme. You should be extremely cautious when receiving such proposals for investment opportunities, especially if you did not ask for it and do not know the sender.
  • It sounds too good to be true. If the investment proposal is too good, then it is most likely to be fraud. Remember that investments that bring high returns are more likely to occur with higher risks.
  • The persuasion to invest money right now. The scammers often try to cause a sense of urgency to get an investment from you. Take time-out for a detailed study of the proposal, before you transfer your money.
  • Unlicensed salespeople. Most fraudulent investment schemes involve the participation of the persons whose activities are not licensed, or firms that have not been registered.
  • No requirements for the size of your income or capital. Federal securities laws require the securities to be registered by the Commission, if the exemption from registration is not applied. Many exceptions for the registration require the investors to be accredited; some others have investment restrictions. Pay special attention to the private (that is, unregistered) investment offers that do not request information about the amount of your equity or income, or existing restrictions on investing.