Token Sale Agreement is one of the key legal documents in the cryptosphere, which defines the terms and conditions of tokens offer within the framework of initial coin offer (called, for example, Initial coin offering - ICO, Initial Token Offerings - ITO or simply tokensale). This document serves as a means of formalizing a capital raising transaction, and is used by crypto startups to issue and sell digital tokens to investors.

What relationship is regulated by the Token Sale Agreement?

Token Sale Agreements establish a legal relationship between the issuer and investors. Such an agreement includes the definition of the rights and obligations of the parties, terms of distribution of coins, terms and order of their offer.

What is the purpose of Token Sale Agreement (what tasks does it solve for the issuer)?

The Token Sale Agreement is an extremely important document, as it facilitates a variety of tasks for both the issuer and investors. In particular, it regulates the following aspects:

  • Legal formalization. The agreement provides a legal framework for token offerings by setting clear terms and conditions for the transaction. It includes information about the price of the coins, their functionality and the timing of Initial Token Offerings.
  • Compliance with the law. It is important that the sale of tokens complied with the applicable law. The agreement should also spell out the functionality of the tokens, certain risks and limitations, which will help determine whether securities laws apply to the transaction.
  • Advocacy of interests. The document protects the interests of both the issuer and investors, minimizing the risks of misunderstandings and disputes. It defines the scope and grounds of the issuer's liability, the procedure for resolving possible conflicts and provides mechanisms for their resolution.
  • Adaptation to the specifics of the project. Each ICO is unique, and the document can be customized to meet the specific needs and conditions of the project, including the specifics of token functionality, usage, and potential market impact.
  • Smart Contracts. In some cases, the document may include terms for the creation and use of smart contracts on blockchain platforms, which provides automation and improves the efficiency of obligations performance under the transactions.

Thus, at present, the importance of correct legal formalization of this kind of contracts cannot be overestimated. A properly drafted document provides protection and certainty for both the issuing company and investors participating in tokensale, providing for an efficient and successful tokensale.

GMT Legal's lawyers have extensive experience in drafting and executing these types of agreements, taking into account all the client's needs and goals, and are ready to assist in its creation to perform successful transactions.