National Unrecovered Financial Services white paper, Virtual Currency: Risks and Regulations, describes the types of virtual currencies gaining prominence in the marketplace today, the roles of the players in virtual currency systems and transactions, the consumer and systemic risks associated with virtual currency systems, and potential regulatory approaches to managing those risks. Part I of the white paper defines “virtual currency” and describes the current regulatory environment for virtual currency in the United States. Part II describes the key players and their roles within the Bitcoin system, as well as the flow of a basic purchase transaction using Bitcoin. Part III discusses the application of certain functional and prudential payment systems regulations that may be applied to protect users of the Bitcoin system (and, by analogy, other convertible decentralized virtual currency systems). Part IV evaluates the potential avenues for regulation of virtual currency, investment programs involving virtual currency, and exchanges trading virtual currency under U.S. securities and commodities laws and state laws.