Preparing to issue a digital security on the blockchain is exciting but it’s no small endeavor. As you prepare for your project, consider your readiness against these four steps.
Our very first and number one question to any company who talks to us about a token offering is whether they have secured legal counsel already and if so, which firm? Seeking sound legal guidance is no longer a luxury; it’s a must. So start there and engage a global law firm with a track record with major brands that have launched a digital asset or digital security that resembles your own. Ensure your counsel is comfortable with your go-to-market plan for your digital asset or security and can provide guidance across all of the jurisdictions that you’re planning for issuance. And remember, in today’s regulatory climate it is very challenging to argue a digital asset is not a “security” for at least its early phases.
You may want to create a diagram to outline who you expect the parties interacting with your product or token may be and how anything of monetary value is expected to transfer and under what conditions. Specifically, the first step is to outline who the parties are and what their role is expected to be. The next step would be to outline how funds would transfer from one party to another, as in this example:
Your counsel will want to know this information in order to provide clear guidance on what regulations apply to your situation, what licenses you may need, and what jurisdictions you may operate in..
As you prepare to put the pieces together for your token offering, you’ll want to have clear objectives at the start about the purpose, focus and extent of your offering. Offerings intending to raise money usually benefit from thoughtful preparation around how much money will be sought, how that will be achieved, and the budget for doing so.
To be clear, TokenSoft doesn’t assist in finding investors or fundraising. We assist with security and technological implementation of your stated goals. But we have observed significant variation in what projects desire and in the workflows teams design to seek those objectives. From investor outreach, to targeted geographies, to third party broker-dealers or similar support, to internal teams and strategies — success tends to favor the prepared. And just as important as the marketing pieces, you’ll want to select the right issuance platform to support your launch. See our Questions to Ask on this topic.
A compelling whitepaper will provide detailed context to your legal counsel about your project. Many papers start with legal disclaimers, which would be provided by your legal counsel. From there, whitepapers often discuss the project, key milestones, the token details, including the technical architecture and the details of the token offering (often referred to as tokenomics). Whitepapers then usually close with your business model and background of the team. The paper may also discuss (sometimes prominently) why the project is a worthwhile market opportunity and the overall state and prospects of the industry. Other disclosures are also usually included, such as risk factors. Expect your counsel to review and comment on your whitepaper.
We’ve found that when clients contact us for their launch and have these steps accomplished, we can get their project launched in under a month. Of course, timelines differ based on complexity and readiness.
If you’re seeking to launch your product, feel free to connect with us at www.tokensoft.io