ICO Legal Services – Token Issuance and Sale

Trust experienced blockchain ICO lawyers for your project’s token sale

LegalBison’s in-house team of ICO lawyers has years of experience in enriching the community with successful ICO projects. Token issuance can be a tedious process with multiple legal angles to be taken into account. The most widespread type of ICO lawyer’s assistance is the issuing of a legal opinion, which can be required both for startups and already established projects. There is no better way to assess your token from a legal standpoint than to request a legal opinion from an ICO lawyer.

The team also specializes in forming legal entities for ICO, applying for a crypto license in cases where it is obligatory, and providing ad-hoc legal advice concerning already existing tokens. Despite their immense popularity, crypto tokens are far from being properly regulated, henceforth consulting a reliable ICO lawyer will help your project stay on the safe side.

Does my token require a legal opinion?

When issuing a token, depending on the jurisdictions and the use case of your creation, the domestic regulator might not like what they see. In some cases, a token can be considered as a security by the financial regulators of your country. Securities are highly regulated financial instruments, issuing one without proper authorization is therefore prohibited in virtually all the world. The consequences one may face for issuing a security token without proper authorization can be dramatic.

A legal opinion is a statement issued by a certified lawyer that, based on law texts, gives a solid assessment of the token’s nature. This assessment is preferably done before its issuance, but can also be performed afterward. The legal opinion can be presented to regulatory authorities when a doubt is emitted. It clears the debate and safeguards the project from potential legal trouble. A legal opinion can also state that a token will likely be classified as a security, and give indications to reclassify it.

Having a legal opinion for your cryptocurrency pushes your project forward and unlocks situations, for example in the following cases:

• When you are willing to be listed by a launched regulated CEX (Centralized Exchange);
• When you want to open a crypto bank account, banks will often require a Legal Opinion confirming the legality of your operations by FinTech legal and compliance experts.

For Europe-based crypto projects, having a legal opinion specifically for the EU’s future regulation MiCA (Markets in Crypto Assets) is deemed advisable. LegalBison strongly recommends being legally compliant, in the scope of the upcoming regulation of stablecoins and token issuance, which will gradually apply to all European Member States, starting from December 30th of 2024, with the deadline of enforcement for every country being set 18 months later (with talks to shorten this period to 12 months). The enforcement can then be immediate or half of 2026, depending on the country. Ask about a specific jurisdiction directly to our experts.

LegalBison’s in-house lawyers are issuing opinions on cryptocurrency every month. Their work has successfully saved a ton of time and money for an increasing number of promising web3 projects. The difference between a successful, serene launch, and a troublesome ITO, can reside in the preparation of such a legal document.

Should I form a legal entity before issuing my token?

When building a web3 project, the legal and administrative details are likely to be your least favorite ones. But you are certainly aware of their importance, as the law can be harsh on crypto projects failing to comply with the regulations. This is where LegalBison comes for assistance: to relieve you from the risk of operating against the regulations and exposing yourself and your team to various sorts of risks.

In the case of a token sale, a legal entity limits the liability of the project’s team members to the company. If something goes wrong, there is a limited liability for the individuals depending on the jurisdiction. Note: This, of course, depends on the type of wrongdoings. The assets of the company can be engaged in a lawsuit, not yours. Of course, this is an extreme case, but there is no such thing as being too safe. A legal entity is a simple way to avoid life-altering drawbacks in case something goes wrong.

Additionally, this gives substance and credibility to your operations. Your community will notice that you are operating through a registered entity, meaning that operations are being carried on seriously and in a lawful way.

LegalBison is familiar with the jurisdictions that are the best for registering a crypto activity. Some specific countries are notably advised to launch a token, and our expert ICO legal and compliance team will be glad to share their insights with you in a free consultation.

Do I need a crypto license for my ICO?

A so-called crypto license is a must in certain circumstances. This is a step beyond the creation of a legal entity. A crypto license (also called VASP or CASP license in certain jurisdictions) is a certificate that your company is complying with all the regulations pertaining to certain crypto activities in a given country. This is the absolute best way to demonstrate trustability to your community, but not only.

Let’s say you want to conduct your ICO and offer, for example, the possibility for your community to purchase the token by credit card payment.

This implies that you would require two things:

• A bank account, in order to receive the payments made,
• A payment service account, in order to process the card payments on your behalf for a small fee.

Getting a crypto license for your web3 project is the necessary proof that banks and payment service providers require to agree to work with you. It demonstrates the compliance of your operation with the conditions set by a recognized regulatory authority. This proof of trustability is also increasingly required by community members, who have grown aware of the risks of being scammed by malevolent cryptocurrency issuers.

Crypto licenses are at the heart of LegalBison’s expertise. We assist and guide dozens of companies every month onto the path of getting a crypto license. We are also familiar with the related topics of banking and payment. Our ICO attorney will be delighted to share their professional knowledge with you and help you make sense of the requirements to properly start a crypto project.

What if we launched our token already? Is it too late to get a legal opinion, or form a legal entity?

No, as it is obviously better to comply late than never. Issuing a token without a legal opinion and a legal entity isn’t a crime. What matters is that your country of residence can turn back on you legally or tax-wise, and the personal liability of the participants will be invoked.

Those are potentially extreme cases but protecting your creation, your team and your community are always recommendable at any stage of your roadmap, even though the earlier the better.

If your token is live, the sales have begun or are finished, and you don’t know what to do: no worries. LegalBison can serenely advise you on how to safeguard your whole project legally, providing the necessary legal opinion for an ICO/STO/IEO and other services that would be deemed important to your specific situation.

Token Classification

The law has a different vision of tokens than the crypto community. Legislators worldwide have yet to come to terms with the novelty brought by blockchains and cryptocurrency projects. Different countries have divergent views on the matter, but a few common points remain:

• The will to regulate crypto,
• The amalgamation of security tokens as traditional securities.

This means that token classification is necessary to avoid potentially harmful lawsuits if a court demonstrates that your token is in fact a security.

LegalBison can protect your project from this potentially lethal pitfall by producing a legal opinion on your token.

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Currency of the sale

Being able to offer card payment for your token sale, for example, can significantly increase the success of your ICO. Being able to put a price in USD, EUR, CHF, or JPY and not just stablecoins (USDT, USDC) or L1 cryptos (ETH, BNB, SOL) can help tremendously with the mass adoption of your cryptocurrency.

The setup behind the ability to propose card payment for your token requires a mix of IT and legal groundwork, in addition to agreements and partnerships with banking institutions and payment service providers.

A proper legal setup will be the foundational layer of your successful token launch. As your project will demonstrate accountability and compliance with official regulations, it will thus open the door to providing fiat-to-crypto transactions for your community.

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NFT Issuance

Non-Fungible Tokens are still a form of cryptocurrency, as they are tokens launched on-chain. Launching your NFT project also requires careful planning on the legal and administrative sides.

In a similar fashion as L1 crypto or tokens, your NFT can be subject to various classifications depending on its use cases and the enforceable jurisdiction. If you don’t know in which category your NFTs will fall and what it will imply for you and your holders, legal assistance is highly recommended.

Selling NFTs that you have created will raise similar types of questions as for other forms of crypto:

• Do they classify as a security?
• Is the income generated by the NFT sale subject to some form of income tax?
• What is the flow of money, starting from the client to the end point within your project?
• What is the legal framework for NFTs that can be burned by the user?
• Am I legally liable in case my NFT is used for money laundering?

These legal questions are critical enough to be addressed by FinTech Lawyers from LegalBison.

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Regulation of Airdrops

There are as many ways of conducting an airdrop as there are crypto projects in web3. For this reason, your specific plan may face different challenges as the airdrop of another project before you. Conditions of eligibility, nature of the token, pre-sale, and eventual data collection if relevant.

All of these aspects can tilt the legality of your project and require different documents and dispositions. The formation of a legal entity and the acquisition of specific licenses may be advisable in some cases.

Before planning your airdrop, make sure you are operating in compliance with the laws that apply to your project and its members (if they are legally liable).

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Crypto Licenses and ICO/ITO

Do you need a crypto license to legally perform your ICO, ITO, STO, or IEO? A token generation event may be required to be operated by a crypto-licensed entity, in some conditions. It is hard to give a short summary of these conditions, as every project is unique.

A crypto license is always a net benefit for a crypto emitter. In addition to opening the doors of financial institutions, it helps gain trust from your community, advertise the durability of your project, and avoid potential legal issues, in an increasingly regulated context.

Measure the pros and cons of getting a crypto license before proceeding to your token launch by exchanging with an experienced blockchain ICO lawyer.

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Legal entity of the seller

If something goes wrong, if your token is captured by a malevolent group of individuals for money laundering for example, what can happen to your team and your project?

Liability can be imposed on a legal entity instead of the individuals who were acting and working in goodwill. However, not all forms of companies and not all jurisdictions are suitable for an initial cryptocurrency or token offering. Assessing the right legal entity for selling your token is therefore critical for the good conduct of the sale.

With an increasing number of projects trusting LegalBison each year for their token launch, our team is confident in its ability to provide you with a suitable legal entity.

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What is a utility token?

Simply put, a utility token is a cryptocurrency with a practical use case. This use case (“utility”) can be manifold: voting rights, governance, access to a Web3 service, etc. This is the most commonly found type of token among ICOs and ITOs, as it is common for a web3 project to use a token to innovate. The utility token therefore becomes part of the innovation embedded in the project.

The line between utility tokens and security tokens, however, is thin. If the cryptocurrency gives the right to financial returns or a certain level of decision-making, it can be described as a security. More information below.

The most famous utility token is ETH, the cryptocurrency of the Ethereum blockchain. This cryptocurrency can be staked (in a certain amount) to allow its holder to participate in the chain validation, through the mechanism of Proof of Stake.

Example of legal assistance around a utility token issuance

BisonDAO is a fictive non-profit organization, willing to share its enthusiasm for bisons among its members.

With the assistance of LegalBison, BisonDAO first sets up a company in an offshore crypto-friendly jurisdiction, in order to provide a legal entity to their project.

The utility status of the BisonDAO coin is affirmed by a legal opinion, produced by LegalBison’s certified lawyers.

BisonDAO is then set to safely raise funds by selling their token. At the end of the sale, the token holders vote for initiatives, making use of the raised funds, to preserve wild bisons.

What is a payment token?

A payment token is the simplest form of cryptocurrency. It is a token that can only be stored and sent. It doesn’t fulfill any other function than being used as a means of exchange.

The ultimate example of a payment token is Bitcoin (BTC), which can only be sent and received, or kept in a wallet.

Example of legal assistance around a payment token issuance

Payment tokens are fairly simple cases, though they are rare.

BisonMoney is a payment token, whose value tries to not be speculative, but rather tied to a smart contract mechanism. Without getting too much into details, this token doesn’t have any collateral such as most stablecoins, its value is regulated by an algorithm that burns and emits tokens depending on price variation.

It is then good practice to give a legal body to the organism issuing the payment token and taking charge of the value stabilization smart contract. This mechanism can then be certified within a set of legal documents, to demonstrate the transparency and trustworthiness of the algorithm.

Additionally, a legal opinion can be issued to clear any doubt on the nature of the token.

What is a security token?

A security token is a cryptocurrency whose characteristics are similar in use as a financial security.

If holding your token gives rights similar to holding a stock, it shall be classified as a security token.

The most common features of a security token are voting rights in a lucrative organization, the right to interest on the profits generated by the project and token activity, and the binding of a piece of property on the project to the token. Note that these elements can absolutely apply to an NFT as well.

Example of legal assistance around a security token issuance

BisonWeb3corp is a digital platform, funding and patronizing numerous promising projects, as a launchpad. Its goal is to develop a web3 ecosystem, as a company.

BisonWeb3corp issues the Web3CorpCoin. Holding this token gives the holder a right to decide on the projects to fund or not, and a share of the profits generated by the projects that the launchpad invested in (and subsequently owns to some extent, as a fund).

A legal opinion is first issued to confirm the security token nature of Web3CorpCoin.

It becomes then easier to plan and structure the legal requirements to lawfully sell and operate this token: a licensed investment company is set in order to legally underwrite securities, while a second company is formed in a crypto-neutral jurisdiction to lawfully issue and manage the token supply.

Later, BisonWeb3corp wants to embed an exchange platform on its website, to allow users to trade Web3CorpCoin with fiat currencies (USD, EUR) and with the tokens of the projects it invested in. With the assistance of LegalBison, the company registers a crypto licensed company in order to lawfully operate the exchange.

What is an NFT?

A Non-Fungible Token (NFT) is a type of blockchain token that is unique. There are no two similar NFTs, while two Bitcoins are similar. NFTs being unique, they are then used for a variety of use cases implying property. The most commonly seen use case of NFTs is digital art, where a picture stored on the blockchain through IPFS (Inter Planetary File System), is tied to a NFT as a certificate of property. Owning the NFT therefore means owning the picture.

Example of legal assistance around collectible NFTs

BisonNFT issues a series of 10,000 AI-generated pictures of bisons, in the form of NFTs. Each of these NFTs will be sold on BisonNFT’s website for 0.1 ETH each. Holding a BisonNFT gives you the right to participate in the community of BisonNFT holders, which plans to hold secret parties all over the world.

The first step to legally issue the NFTs is to qualify their nature with a legal opinion. NFTs aren’t a token class, they can be utility tokens, security tokens, or even payment tokens.

In the case of BisonNFT, the non-fungible token seems to be characterized by its use case: access to a community and to events. One may then assume that the BisonNFT is a utility token. However, for the sake of certitude, only certified lawyers can provide the project with an authoritative document to state the matter. That document is known as a legal opinion.

Once LegalBison’s lawyer has produced such an opinion, BisonNFT’s board’s roadmap will depend on its say. The cases described above may apply, with certain differences and subtleties. The LegalBison expert in charge of assisting BisonNFT will suggest a full turnkey solution to operate lawfully and ensure the legal safety of the team and of the community while providing the latter with a solid demonstration of trustworthiness.

Having the above sorted out is a critical matter. Many projects, especially in highly regulated jurisdictions, ended up with lawsuits due to improper (or absence of) legal preparation. With an ever-increasing scope of the industry of cryptocurrency and acknowledgment from the public, even small-scale operations are facing serious consequences in the case of issuing a token without proper legal preparation.

Issuers of an improperly regulated or legally framed token can be subject to hefty fines or even enjailment, and obviously the confiscation of the profits generated from the token sale. This is a global reality, and the trend is leading to harder sanctions as the amount of scams has soared in the past years.

It is now an obvious necessity for any legit project to prepare its legal grounds properly, in order to release and sell a token and to operate a crypto activity of any nature.

How about the new regulations in Europe: MiCA?

With the enforcement in 2025 of the Markets in Crypto Assets Regulation, the rules for ICOs in Europe have becoming codified. We put out an entire guide on token issuance with MiCA for information and guidance.