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A Token Sale Agreement establishes the legal terms when a company sells digital tokens or cryptocurrencies to investors. It spells out key details like token pricing, purchase limits, and delivery timing - similar to how traditional securities agreements work, but specifically for blockchain-based assets.

These agreements help companies comply with SEC regulations and securities laws while protecting both the token issuer and buyers. They typically include important safeguards like KYC requirements, transfer restrictions, and risk disclosures. Many startups use them during Initial Coin Offerings (ICOs) or Security Token Offerings (STOs) to raise capital while staying within legal boundaries.

Use a Token Sale Agreement when launching a cryptocurrency or digital token offering to investors in the United States. This agreement becomes essential before accepting any funds or distributing tokens, especially if your offering might qualify as a security under SEC guidelines.

The timing matters most during your pre-sale phase and initial token distribution. Companies preparing for ICOs, STOs, or private token sales need this agreement to define investor rights, establish compliance protocols, and protect against future disputes. It's particularly crucial for startups raising capital through token sales where regulatory scrutiny is likely.

• Simple Token Sale Agreement: Basic version for straightforward token sales, typically used by early-stage startups offering utility tokens
• Security Token Sale Agreement: Comprehensive version with detailed SEC compliance provisions for tokens classified as securities
• SAFT (Simple Agreement for Future Tokens): Pre-sale agreement where tokens aren't yet developed but will be delivered later
• Multi-Round Token Sale Agreement: Structures multiple investment rounds with different terms and token prices
• Institutional Token Sale Agreement: Enhanced version with sophisticated investor provisions and larger purchase minimums

• Token Issuers: Tech companies, blockchain startups, or established businesses launching cryptocurrency offerings
• Securities Lawyers: Draft and review agreements to ensure SEC compliance and protect issuer interests
• Token Purchasers: Individual and institutional investors buying tokens through the offering
• Compliance Officers: Oversee KYC/AML requirements and maintain regulatory compliance throughout the sale
• Technical Developers: Implement smart contracts and handle token distribution mechanics
• Financial Advisors: Guide token valuation, sale structure, and investment terms

• Token Details: Define token type, total supply, price, and distribution schedule
• Investor Criteria: Establish purchaser qualifications, KYC requirements, and investment limits
• Sale Structure: Document timing, phases, minimum/maximum purchase amounts, and vesting schedules
• Legal Classification: Determine if tokens qualify as securities under SEC guidelines
• Technical Specs: Outline blockchain platform, smart contract details, and wallet requirements
• Risk Disclosures: List potential investment risks, regulatory concerns, and market volatility factors
• Exit Terms: Define transfer restrictions, lockup periods, and resale limitations

• Token Description: Detailed specifications of the digital asset, including type, functionality, and total supply
• Purchase Terms: Price, payment methods, minimum/maximum investment amounts, and sale periods
• Distribution Terms: Token delivery timeline, vesting schedules, and lockup periods
• Representations: Buyer and seller warranties about legal capacity and compliance
• Risk Factors: Comprehensive disclosure of investment, technical, and regulatory risks
• Compliance Provisions: KYC/AML requirements, securities law compliance, and transfer restrictions
• Dispute Resolution: Governing law, jurisdiction, and arbitration procedures

A Token Sale Agreement differs significantly from a Simple Agreement for Future Tokens (SAFT), though both are used in cryptocurrency fundraising. Let's explore their key differences:

• Timing of Token Delivery: Token Sale Agreements handle immediate token transfers, while Simple Agreement for Future Tokens promises future delivery once tokens are developed
• Development Stage: Token Sale Agreements require existing, functional tokens, while SAFTs are used for pre-development fundraising
• Legal Classification: Token Sale Agreements can cover utility or security tokens, while SAFTs typically involve investment contracts under securities laws
• Risk Profile: Token Sale Agreements have lower technical risk since tokens exist, while SAFTs carry additional development and delivery risks
• Investor Rights: Token Sale Agreements provide immediate ownership rights, while SAFTs offer contingent future rights dependent on successful development