Token Sale Agreement Template for England and Wales

A Token Sale Agreement sets out the terms and conditions when a company sells digital tokens or cryptocurrencies to investors. It's a crucial contract that spells out exactly what buyers are getting, how much they're paying, and when they'll receive their tokens - similar to a share purchase agreement but specifically for blockchain assets.

In England and Wales, these agreements must comply with FCA regulations around financial promotions and the sale of digital assets. The document typically covers key details like token functionality, vesting periods, purchase limits, and what happens if the project fails. It protects both the company issuing tokens and the investors buying them by creating clear legal obligations under UK contract law.

Use a Token Sale Agreement when launching a new cryptocurrency or digital token offering in the UK market. This becomes essential before accepting any investment or promising future tokens to buyers, especially if you're running an Initial Coin Offering (ICO) or similar fundraising event.

The timing matters most during your pre-sale planning phase - ideally 2-3 months before any public announcement. This gives you time to address FCA requirements, structure the sale terms properly, and build in key protections like anti-money laundering provisions. Having this agreement ready early helps avoid regulatory issues and gives investors the confidence to participate in your token sale.

• Basic Token Sale Agreement: Covers fundamental terms for straightforward token sales, including payment, delivery, and basic investor rights.
• SAFT-Based Agreement: Follows the Simple Agreement for Future Tokens model, popular for pre-sale arrangements where tokens don't yet exist.
• Security Token Agreement: Contains additional FCA-compliant provisions for tokens classified as securities under UK law.
• Utility Token Agreement: Focuses on tokens providing access to specific services or platform features, with detailed usage rights.
• Hybrid Agreement: Combines elements of utility and security token provisions to accommodate evolving token functionalities.

• Token Issuers: Tech companies, startups, or established businesses launching cryptocurrency or digital token projects needing to structure their token sales legally.
• Corporate Lawyers: Draft and review Token Sale Agreements to ensure FCA compliance and protect their clients' interests.
• Investors: Individual and institutional buyers purchasing tokens through the agreement, often including venture capital firms and crypto investment funds.
• Compliance Officers: Monitor adherence to anti-money laundering regulations and ensure proper investor verification procedures.
• Financial Advisors: Guide clients through token sale participation and help evaluate investment terms.

• Token Details: Document your token's technical specifications, total supply, distribution schedule, and intended functionality.
• Sale Structure: Define pricing tiers, minimum/maximum purchase limits, vesting periods, and lock-up requirements.
• Compliance Check: Confirm FCA requirements for your token type and prepare KYC/AML procedures.
• Risk Assessment: List potential project risks and draft appropriate disclaimers and warranties.
• Platform Integration: Use our automated system to generate a customized agreement that includes all required elements under UK law.
• Review Process: Double-check all commercial terms and technical details before finalizing.

• Token Description: Detailed specifications of the digital asset, including type, total supply, and functionality.
• Sale Terms: Clear pricing, payment methods, distribution schedule, and purchase restrictions.
• Investor Rights: Token holder privileges, voting rights, and any profit-sharing arrangements.
• Compliance Provisions: FCA-mandated disclosures, KYC requirements, and anti-money laundering procedures.
• Risk Factors: Comprehensive disclosure of project risks and limitations.
• Legal Framework: Governing law, dispute resolution mechanisms, and jurisdiction clauses specific to England and Wales.
• Smart Contract Terms: Technical parameters and blockchain implementation details.

A Token Sale Agreement differs significantly from a Simple Agreement for Future Tokens (SAFT), though they're often confused in cryptocurrency transactions. While both deal with digital assets, their timing and purpose vary considerably.

• Timing of Token Delivery: Token Sale Agreements handle immediate token transfers, while SAFTs promise future tokens once developed.
• Legal Classification: SAFTs are investment contracts under UK securities law, whereas Token Sale Agreements can cover utility tokens not classified as securities.
• Risk Profile: SAFTs carry higher risk as they deal with undeveloped tokens, while Token Sale Agreements cover existing assets.
• Regulatory Requirements: SAFTs face stricter FCA oversight and investor qualification rules compared to standard token sales.
• Price Structure: Token Sale Agreements specify fixed prices, while SAFTs often include discount mechanisms for early investors.