- Web3 Insider Trading Policy
- FAST Token Addendum
- Internal Crypto Funds Management Agreement
- Authors
- Contributions Welcome
- License
- Disclaimer
The world of web3 and crypto is known for its liquidity where many projects have their own tokens early on that are listed and traded 24/7 on global crypto exchanges or via decentralized exchange protocols. This makes this market susceptible to market manipulation and insider trading. To minimize such risks within the team, it is recommended to adopt and implement insider trading policies from day one. An example of such policy is available in this repo. Under the template:
- The insider may not trade crypto if he is aware of something that’s not public and may influence price
- The policy introduces the role of compliance officer with authority to prohibit and allow trading and resolve borderline situations
- If the company plans to make a significant announcement soon, the compliance officer will declare a non-trading period, during which people who have received notice of it may not trade crypto
- If a person tips another person to enter transaction based on the former having some insider information, both may be found liable
The practice of engaging advisors is very common among traditional startups. The company and the advisor would usually enter into a founder advisor standard template (“FAST”) or its variation. Under the FAST, the advisor is entitled to receive restricted common stock or options to purchase common stock. Web3 projects that already have tokens or consider issuing them in the future may offer their advisors tokens or a combination of tokens and equity. If you consider offering your advisors both equity and tokens, you may find this FAST Token Addendum helpful.
Under this addendum, the advisor is entitled to receive a certain amount of tokens that are subject to lock-up. Key definitions are moved up to the top to make the reader familiar with them from the beginning, while others are incorporated in the text.
Sometimes you need to designate a person within your company to handle certain transactions with crypto funds belonging to the company. For example, an accountant may need to convert some of the company’s own tokens into stablecoins to pay salaries. Or a marketing team needs some crypto to carry out on-chain operations, such as issuing NFTs. In such cases, it may be prudent to sign an Internal Crypto Funds Management Agreement detailing the procedures and defining the scope. Under this template:
- The agent’s mandate and authority are limited to the execution of the principal’s instructions without any discretion
- The agent’s liability is limited to willful malfeasance, bad faith, or gross negligence, while the principal is solely responsible for its investment decisions, if any
- The agent’s fees are included in the salary for its employment
- The agent must keep detailed records of transactions with delegated crypto funds
These documents were drafted and reviewed by Roman Buzko, Vasily Agateev, Filipp Petkevitch, and Evgeny Krasnov of Buzko Krasnov. Check out our dedicated web3/crypto page and Web3 Startup Legal Guide for more information for web3 builders.
If you are an attorney, software developer, or both, your comments are welcome. You can propose changes through GitHub or contact us through other channels.
This work and any documents contained therein are licensed under the Creative Commons Attribution-ShareAlike 4.0 International Public License. See the LICENSE.md file for more details.
Any documents published in this repository are designed to be a starting point only and should be tailored to meet your specific requirements. Consult an attorney before entering into any binding legal obligations. We assume no responsibility or liability for any errors or omissions in any work product that is a result of our efforts. We are not responsible or liable for any consequences of any person acting, or refraining to act, in reliance on this repository or for any decision based on it.