Part II: Principles for Token Sales and Token Sale Service Providers
As part of our explainer series shining light on our Code of Conduct, we wanted to look into the topic of best practices for token sale service providers and token issuance.
The second part of the Code focuses on establishing and maintaining accountability and credibility of the issuance and sale of tokens through formal governance procedures.
This part of the Code addresses the ambiguity of the nature of tokens, stressing the importance of seeking legal advice to determine whether or not the token falls within the remit of financial laws, and indeed which part of financial laws.
Second T for success
In order to establish trust, the Global Digital Finance (GDF) community wanted to ensure that the Code helps drive transparency. From an organisational perspective, this includes openness about who runs the digital asset project, which organisations it is associated with, how the project is run. This includes setting out their anti-money laundering (AML) and counter terrorist financing (CTF) procedures, and ensuring they disclose any conflict of interest among the core team.
There must also be transparency about technology.
What stage of development is the project at? What are the risks and opportunities? How many nodes are running or expected to run? Is the project running in a permissioned or permissionless manner? What are the technical specifications of the token?
The project must include a description of the rights that the token purchasers have in the event that the issuers wind down operations. In addition, it commits to regular disclosures of financial and technical audits, as well as to informing users when there are major changes to the project.
These key principles were identified as the most material to the growing new industry. However, as the latter continues to evolve and mature, so will our Code of Conduct. As a living document, we continue to gather feedback from the global community of players, regulators and policy makers to ensure the Code continues to reflect market and industry developments.
Read Part II of the GDF Code of Conduct in full:
