Digital Assets and Related Investments – What You May Need to Consider

Is it direct holdings of digital assets? If not, you may need more details about the financial product. Is it future contract, OTC contract, an option? Please get more details, and consult with your financial expert/advisor/adviser.

Custody, where the digital asset stored? Is it regulated exchange? where is it regulated? Off-shore regulated entities may be more risky than US/UK/GERMAN/AUSTRALIA/FRANCE/SWITZERLAND regulated entities 🙂

Manipulation in the digital asset markets. Can the digital asset price can be manipulative easily? If yes, the asset price can be very volatile, and you may lose your invested capital.

Fee disclosure – do you know everything about the fees you will be charged? some business can cut a large sum from your invested capital, in order to make their business richer.

Liquidation – If you will need your funds back, how fast you will be able to get it back into your bank account? Some asset are not very liquidated, and you will not be bale to exchange your digital asset back to FIAT. You may not be bale to pay your monthly expenses, including rent, electricity, mortgage, since those can only be paid with FIAT (EUR, USD, GBP, AUD, NOK, SEK etc.).

Technology and user friendly – do you know how to handle the registration process, where do you see all the disclosures, terms and conditions, your account balance, your account status, user interface, broker contact details? If not, make sure you control everything more than perfectly. No one else will do it instead of you.

What is your risk tolerance? if it is very low, you may need to consider more traditional investments, the regular stock market may be better option (S&P 500 stocks can be better option for you).

No investment products are absolutely risk-free. This can be particularly true with novel and previously-untested investment strategies. Investors should proceed with caution, ask questions, and consider their risk tolerance before investing.

Life is risky, and so is investing.

Is it really limited liability company or “phoenixing”?

What phoenixing is?

Phoenixing is a common term used to describe the practice of closing a firm and that firm re-appearing under a new guise to avoid liabilities arising from the old firm. Each time this happens, the insolvent company’s assets, but not its debts, are transferred to a new, similar ‘phoenix’ company.

The insolvent company then ceases to trade and might enter into formal insolvency proceedings (liquidation, administration or administrative receivership) or be dissolved.

What the FCA is doing to prevent financial adviser phoenixing?

It has a broad programme of work under way to tackle the harm caused to consumers when regulated financial advice firms and individuals seek to avoid liabilities to consumers that have arisen because of the poor advice they have given. As part of thier ongoing supervision of firms and of individuals controlling firms, they actively look out for and act on, situations where a FCA regulated firm or individual is seeking to avoid their liabilities arising from awards made by the Financial Ombudsman Service or are deliberately seeking to avoid paying in the future because of their poor advice or practices.

Where the FCA finds individuals who deliberately avoided their responsibilities and not complied with previous awards made against their firms, it will question the fitness and propriety of these individuals and take necessary steps against them so that they don’t cause further harm to consumers.

What you can do to protect yourself from poor financial advice or a potential phoenixed firm?

Research the financial advice firm/financial adviser

  • Check on the Financial Services register whether the firm or individual you are dealing with is regulated by the FCA. If you deal with a firm (or individual) that is not regulated you may not be covered by the Financial Ombudsman Service or the FSCS.
  • Consult the FCA Warning List to check if the firm is known to be operating without FCA authorisation and for any FCA Enforcement decisions/actions against the firm or adviser.
  • Check the Financial Ombudsman Service  website for the firm’s record of complaints to help inform your decision on whether you wish to receive investment advice from the firm.

Don’t be the next victim, you can take control of your own destiny. It is all up to you, some can assist you the get it right.

The London Capital and Finance (LCF) outcome – FCA to ban promotion of speculative mini-bonds to retail consumers

Lesson learned, and actions are taking. The FCA is introducing the restriction without consultation, using its product intervention powers. The restriction will come into force on the 1 January 2020 and last for 12 months while the FCA consults on making permanent rules.

The term mini-bond refers to a range of investments. The ban announced today will apply to more complex and opaque arrangements where the funds raised are used to lend to a third party, invest in other companies or purchase or develop properties. There are various exemptions including for listed mini-bonds, companies which raise funds for their own activities (other than the ones above) or to fund a single UK property investment.

The FCA has limited powers over the, usually unauthorised, issuers of speculative mini-bonds but can take action when an authorised firm approves or communicates a financial promotion, or directly advises on or sells, these products. Alongside this activity, there is evidence of a growing incidence of promotions which are frauds or scams and involve no attempt to meet financial promotion rules. The marketing ban does not apply to such frauds and scams because they are illegal in any event.

The Crypto’s light is already dare (typo error)?

If you are Crypto enthusiast, pro Crypto you can also be optimistic from the following speech giving by Commissioner Hester M. Peirce:

I am concerned about how the SEC has regulated this space, because I believe our lack of a workable regulatory framework has hindered innovation and growth. The only guidance out of the SEC is a parade of enforcement actions and a set of staff guidance documents and staff no-action letters. For example, the SEC’s web page “Spotlight on Initial Coin Offerings (ICOs),” has an “ICO Updates” section that is headlined by enforcement actions brought by the Commission. Only when you click through to “More” do you see other materials. Of particular concern is that these enforcement actions and guidance pieces, taken together, offer no clear path for a functioning token network to emerge. Instead, I support creating a non-exclusive safe harbor period within which a token network could blossom without the full weight of the securities laws crushing it before it becomes functional. By allowing legitimate projects to get their tokens into the hands of a broad set of developers and network users without fear of enforcement, we also would allow the SEC’s Enforcement Division to focus its resources on the fraudulent actors in the realm of crypto offerings.

In a different paragraph she shared the following:

The terms of a settled enforcement action, for example, may turn on considerations that will not be obviously determinative to someone reading the facts set forth in the settlement order. I am thinking of one recent enforcement action that generated quite a buzz in the crypto world because some thought its penalty was too low relative to the amount raised in the offering. Yet, there were some underlying facts that might have argued for the opposite conclusion—that the penalty was too high.

 

UK, information on current account services, or more simply banking services

Current account providers are publishing better information about the services they offer consumers and small businesses. This follows action by the FCA and the Competition and Markets Authority (CMA), and a voluntary commitment by banks and building societies.

This information helps consumers and small businesses find the right service for them, get the most out of it, and get help if things go wrong. It will also help others such as comparison services and the media to compare current accounts.

Please find attached a link for the data, enjoy.

https://www.fca.org.uk/data/mandated-voluntary-information-current-account-services

Some banks will allow you to open an account, issue a debit card, take an overdraft in just 1 day. Or you can just start using crypto-currencies.

Old and not secure

Congrats, but you are in risk. The risk of losing your life, your money and your love-ones.

You need to keep fighting, it does not end until it ends.

Five Red Flags of Investment Fraud

Promises of High Returns with Little or No Risk.  The promise of a high rate of return, with little or no risk, is a classic warning sign of investment fraud.  Every investment carries some degree of risk, and the potential for greater returns generally comes with greater risk.  Avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.”  Remember – if it sounds too good to be true, it probably is.

Unregistered Persons.  Always check whether the person offering to sell you an investment is registered and licensed, even if you know him or her personally.  Unregistered/unlicensed persons who sell securities perpetrate many of the securities frauds that target older investors.  Researching the background of the individuals and firms selling you investments, including their registration/license status and disciplinary history, is free:

  • Search the Financial Industry Regulatory Authority (FINRA)’s BrokerCheck online database.

Red Flags in the Financial Professional’s Background.  Even if an investment professional is in good standing with his or her regulators, you should be aware of potential red flags in the professional’s background.  SEC, FINRA, and state securities regulator records can be used to identify red flags for potential problems, including: (1) employment at firms that have been expelled from the securities industry; (2) personal bankruptcy; (3) termination; (4) being subject to internal review by an employer; (5) a high number of customer complaints; (6) failed industry qualification examinations; (7) federal tax liens; and (8) repeatedly moving firms.

Pressure to Buy Quickly.  No reputable investment professional should push you to make an immediate decision about an investment, or tell you that you’ve got to “act now.”  If someone pressures you to decide on an investment without giving you ample time to do your research, walk away.

Free Meals.  Be wary of “free lunch” seminars.  The ultimate goal of free meal investment seminars is typically to lure new clients and to sell investment products, not to educate the public.  If you decide to attend one, commit to yourself before the seminar that you won’t purchase anything or open an account while at the seminar.  Even if the free meal does not come with a high-pressured sales pitch, you should expect the “hard sell” in subsequent contacts from the person selling the investment.

Highlights from the statement of commissioner Jackson

It may be worth think about the following from his statements about:SEC rules give public companies four days before they must notify the market about market-moving business developments, corporate insiders incentives to pursue stock buybacks, and how public companies spend their money on politics:

I believe that a critical part of the SEC’s mission is to make sure that ordinary investors stand on a level playing field in today’s complex markets. Gaps in our securities laws that allow insiders to trade before key information comes to light; pursue stock buybacks that maximize executive pay but not long-run performance; and spend investor money on politics in secret undermine the trust that ordinary Americans have in our financial system. I am delighted that this Committee is considering how best to close those gaps.

On the other hand, not everything is perfect, as you can see below regarding to rollback of the Volcker Rule:

But even if liquidity were quantifiably lower, it would be hard for me to support these changes. Ordinary American investors aren’t kept up at night worrying about an imagined lack of bond liquidity. They’re wondering why they should trust a financial system that upended their lives a decade ago. The benefits of investor trust in our financial markets are hard to quantify, but they’re doubtless a reason why our markets are the envy of the world. Rolling back risk taking protections like this puts that trust at risk, makes ordinary Americans wary of our markets, and—ironically—may even undermine liquidity.

Dialog is always bringing to a better and robust financial market.

 

 

Some FCA guidelines which may assist Cryptoasset entrepreneurs

According to the speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered at the Cambridge Centre for Alternative Finance annual conference, Judge Business School:

The FCA when faced with novelty, try to gain a crisper view. The FCA asks:

  • What is this thing, why is there a new term and what problem is it trying to address?
  • Who is it for – wholesale banks or retail consumers? Is it within our regulatory scope or outside?
  • Is this really an innovation or just something old in a new, flashy wrapper?
  • Is this potentially to the benefit of consumers and competitive markets or is it likely causing harm by increasing complexity and other risks?

In short, the FCA seeks to consider any cryptoasset, including those labelled ’stablecoin‘, on a case-by-case basis and the FCA encourages both consumers and firms to do likewise.

As the FCA seeks answers to those questions, it expects any would-be cryptoasset issuer to be asking a few of their own before launching a product:

  • Is my product a beneficial innovation for consumers and markets? Or does it include hidden bugs and unmitigated risks?
  • Am I prepared to be open and cooperative with domestic and international regulatory agencies? How do I approach issues like anti-money laundering?
  • Will the target market I have in mind for this cryptoasset be able to make an informed and balanced judgement of the risks and benefits of investing in or using such an asset?
  • Finally, and most importantly, have I completed the regulatory, legal and technical due diligence in advance of launching a new product or service?

In financial services it is vital that innovators get it right the first time round.

When it comes to other people’s money, or safeguarding against terrorist financing, corner cutting is simply not an option.

For those who think the model is to try it in beta for a few million people and see what happens, there may be activities here that are illegal without authorisation in many countries, not just the UK.

The UK has led the rest of the world with developments like the regulatory Sandbox.

One thing that unites those who have been through the Sandbox is the professionalism and preparation shown by the firms involved, who all recognise there is a finite amount of learning through failing fast that can be tolerated when consumers are at risk of harm.

People, it is a good advice, please consider using the FCA sandbox service, you can avoid big legal issues.

The fight against skimmers and scammers speech by the chairman of Britain’s Financial Conduct Authority

Interesting speech, some highlights for you to consider:

How can we make the corporate enablers play their part?

Major companies can effectively enable a huge amount of fraud. The companies which allow people’s personal data to be stolen. The companies which promote advertisements for scams on the internet and thereby profit from these crimes. Quite frankly, they don’t always play their part in remedying the harm they create.

And should the internet service providers, search engines and social media firms be expected to do more to spot and block suspected scammers from using their services? I welcome the decision by Facebook to contribute to the Citizens Advice Scams Action service and to create a scams ad reporting tool, as part of the settlement of litigation against them by Martin Lewis. I hope that Facebook will continue to invest in further anti-scam protections.

And I hope that other internet giants will follow suit. For example, Google searches of ‘high return investments’ continue to reveal numerous very doubtful offers high up the search rankings. We know from the London Capital & Finance case that a large proportion – over £20 million – of clients’ payments to the firm were spent on Google advertising to attract more customers.

The internet giants may argue that it’s too difficult for them to do more, that there are legal complications, or that the internet is too dynamic, changing too rapidly, and that they can’t be obliged to monitor it continually.

Those are fair points. I wouldn’t support imposing unreasonable expectations on the big tech companies but as a minimum I would expect them to take down suspected fraudulent content immediately when requested to do so by the authorities, and ensure that their terms and conditions give them the right to do so. And I would expect them to use their extraordinary resources to work with law enforcement and regulators to develop algorithms and machine learning tools to identify potentially fraudulent content.

I don’t believe that these measures would prejudice freedom of speech. Or that dissent and democracy in our society will be any weaker if we throw some well-aimed grit into the cogs of the online scammers.

The Government’s recent White Paper rightly raises the need for more action to prevent a range of online harms, but doesn’t cover online financial scams which are so devastating. With nearly four million reported cases of fraud a year, and an explosion in online scams, should policy on online harms go wider?

Be aware: SEC Charges ICO Research and Rating Provider With Failing to Disclose It Was Paid to Tout Digital Assets

The Securities and Exchange Commission announced today that Russian entity ICO Rating has agreed to pay $268,998 to settle charges that it failed to disclose payments received from issuers for publicizing their digital asset securities offerings.

The SEC’s order found that between December 2017 and July 2018, ICO Rating produced research reports and ratings of blockchain-based digital assets, including “tokens” or “coins” that were securities, and published this content on its website and on social media. ICO Rating billed itself as “a rating agency that issues independent analytical research,” and stated that its mission is “to help the market achieve the necessary standards of quality, transparency and reliability.” However, ICO Rating failed to disclose that it was paid by certain issuers whose ICO offerings it rated.

“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item,” said Melissa Hodgman, Associate Director of the SEC’s Enforcement Division.  “This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”

Conclusion, do you own research, and don’t be a shame to pay to a local investment adviser it can save you a large sum.

investment adviser = only a person with a valid licence.

Valid licence = the name of the person should be listed on https://www.investor.gov/ website.

By the way, in the UK it is financial advisor +valid licence = the name of the person should be listed on the Financial Services Register, while in Australia it is https://www.afa.asn.au/find-afa-financial-adviser.

Each country has a local list of investment adviser alike, please make sure to check your home country local list, it is your money and your responsibility. If you need help, please let us know via our contact us page, and we will assist you.