Andreessen Horowitz, one of the leading cryptocurrency-focused investment firms, outlined five important rules that new token projects must follow in a recent report.
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Avoid Public Sales in the US for Fundraising
The company recommends not selling public tokens for fundraising purposes in the United States. He points to possible interventions by the SEC as the reason for this.
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Prioritize Decentralization
According to Andreessen Horowitz, decentralization is one of the most valuable aspects of blockchain technology, and cryptocurrency projects should also make decentralization a priority.
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Be Careful About Communication
The firm warns that a single erroneous statement by a CEO could put the entire project at risk. He advises projects to avoid discussing or referencing their own tokens before launching the token. This includes potential airdrops, token distributions or token economy. While the SEC has successfully stopped companies from issuing tokens in the past, the consequences of not complying can be serious.
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Be Careful About Secondary Market Listings and Liquidity
Andreessen Horowitz also recommends caution with secondary market listings and liquidity. The firm states that the SEC's approach to regulation through enforcement constitutes initiatives that run counter to its mission.
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Implement At Least One-Year Token Lockups
Finally, the firm emphasizes the importance of implementing token lock-ups for at least one year following a token launch. This applies to all tokens issued to insiders, partners, and anyone else who may be involved in distributing the tokens.
*This is not investment advice.