Master Your Launch:Navigating 25 With Sharper Regulations and Smarter Token Launches|Stephan&Vincent

[Music] everyone uh I'm Stefan Al AKA pseudo lawyer uh one of the co-founders and chief legal officer for a launch advisory firm called open world previously blockchain lawyer in private practice for a number of years my name is Vincent um I also work at open world with Stefan um on the tokenomics side been in the token launch issuance business for like the better part of three years um and we just finished our first year at open world here yeah um so I think we're going to we're talk a little bit about how do you actually launch a token in 2025 amid amongst all of this regulatory uncertainty Market uncertainty what's actually going on um I think sort of my goals from the legal perspective are talk a little bit about the um uh presidential election in November a lot of the momentum that was created by that a lot of the hope that I think has um has been fleeting quite frankly Market structure uh legislation what's Congress actually going to do what is that going to look like um the SEC and deregulation I think there's been a lot of people in the space a lot of projects in the space trying to understand you know what is the SEC actually going to do especially coming coming off of the what is sort of very chaotic gendler gendler era really interesting um updates and things going on in Europe Europe actually M so I think um MAA in a lot of ways and we'll talk a little bit about that creates this forcing function on the US to try to get it right there's a a lot of really interesting things going on in decentralization in the US with Duna it's a um uh law out of Wyoming other states are likely to follow so what does that mean for decentralization in projects and then um you know something I've been saying for a long time I I think the industry has probably been over indexed on Securities and securities regulations uh blockchain and crypto is uh so much more than than just the Securities regulation so youall sort of try to share some thoughts on what I what I think that the focus ought to be um from various policy makers and from um and from Private Industry yeah okay so I I'll be focusing the second half of the discussion on um kind of like a markets and tokenomics pulse check I think when we wrote this um a few weeks back the market was in a materially different position than where it is now um so I was kind of questioning like hey you know what are like some best practices for um a lot of the Venture back like utility tokens that are coming to Market uh maybe the next few months or quarters um so we'll be kind of thinking about again this like concept of like a pulse check um I have some like really interesting thoughts around like tge uh valuations and sort of like the tremma that um Founders need to navigate when they think about you know what the potential valuation range is you know going to be for their token at or near day one um and then we might touch on Concepts around distribution and capital formation too um that tie into like the go to market for your token yeah so I I think from my perspective a really good place to start is you know um coming off of the genzo era you have Trump winning the presidential election in November of 2024 I I think at that point in time everyone would agree there's this uh euphoria that sort of swept the markets everyone was trying to get out everyone was trying to launch a token um and I think from from the client perspective we had to remind everyone and we have to remind ourselves that nothing has actually changed and I think if I you know retrospectively looking back now sitting here at the end of February the same is is very much true nothing has actually changed now we have seen the SEC um dropped some some pretty notable enforcement actions and investigations Robin Hood openc coinbase of note um but actually I think that's actually added to a lot of the uncertainty that a lot of projects are facing today um BEC because I think what what in in in sort of an ironic way there was a lot more certainty about how to launch a token during the gendler era than there is today because you could be pretty certain that if you did anything in the US U or even us adjacent you were you were you were likely to face some sort of Investigation or there was the the threat of that was quite was quite real now uh sort of post gunzer era um with Trump trump in office I think there a lot of projects are facing with this uncertainty of well what do we actually do because there actually hasn't been any formal guidance from the SEC and you know dropping an enforcement action uh against coinbase or against Robin Hood while good for that particular project um there's there's no there's no reasoned opinion there's no rul making that's that's actually accompanied any of that and so we I we find clients very much in this perspective of well what do we actually do um does that mean that we can come into the US now does that mean we should stay offshore but if we stay offshore does that mean we're not going to be able to capitalize on a lot of the momentum that was generated and that you know a lot of the Hope frankly that was generated with with Trump's election so we're finding that a lot of projects are in this holding pattern um Vincent of course sees tremendous amount on the toonomic side um you know I'd love to know your thoughts on what are you seeing from from the commercial angle in terms of projects that want to try to capitalize on US market us momentum but but seem to be sort of stuck in this holding pattern in part because of the uh regulatory uncertainty I think um what was interesting right after Trump got elected was this like maiden USA kind of like narrative that was um coming about I think move was a big one I think salana Labs is also like us-based and so um there was just like small cohort of teams that were trying to perpetuate like this made in USA narrative which I mean as somebody who lives in the United States is like very exciting very interesting but um didn't really go anywhere because we don't know what the benefits are of being made in the USA or what the potential cons might be for teams so it puts it puts teams that like we work with and teams that are trying to navigate this landscape in a weird position to think about well hey do we do we launch offshore do we kind of like go uh domestically as well like so I don't really have a good answer for it because it's it's not clear what that means or what the benefits are of being made in the USA is I I there's a a big question that I have is do you do you get a sense that there is a uh Market fatigue right now like are people sort of worn out yeah I mean I think it's I think it's pretty obvious that a law of the capital that would be going to um sort of like the middle of the pack tokens these are like not majors and these are not like you know Fly by Night meme coins like everything that would go to like middle of the pack altcoins has been rotated through like the Salona casino now potentially through like Avalanche and through other platforms that are trying to capture um liquidity from Salon is sort of Fall From Grace from right now um and I think a lot of the retail traders that would be bidding altcoins that would be going out through you know centralized exchanges or even um some launches that we work with like the capital is just not there because either it's been extracted through you know the launches like high-profile launches that we've seen um recently or it's just been withered Away by you know overtrading your portfolio over the last year year and a half yeah I mean I think we're also seeing um VCS and sort of you know a lot of the sources of capital also in a holding pattern um they're they're particularly like like projects are particularly sensitive to the to the regulatory developments in the United States and if you're allocating large amounts of capital you're going to want to have some amount of certainty that you know the project or the thing that you're investing is is is uh um is going to be in a in a reasonably good or re be safe regulatory position um in in in a reasonable amount of time on the fatigue side side you know there's there's a there's an interesting crossplay between what Vincent said on the market side and also on the regulatory side you know I think probably one of the biggest developments in 2025 for crypto and for uh having a viable Pathway to launch a token actually happened in the European Union and not in the United States with mik uh m is quite interesting and we've been studying it internally at open World for for a while um it went into effect January 1st of this year and it is um it is the first viable regulated Pathway to offer a token to a to a major Market um now there there are obviously some requirements Ma and I think you know there are some mixed feelings from our projects and from from some other folks that uh that we talk to uh in the industry uh but mik's essentially on its face fairly straightforward it's a it's a regulated pathway um it's harmonized throughout the entire European Union it it enables a project or really anyone else it doesn't even have to be a project so there's a lot of port ility built into M so I as an individual could come across a particular smart contract or protocol and I could offer I I could make an offering under MAA uh to the European market so long as I complied with the m regulation and and the biggest compliance factor for m is having a m compliant white paper what that essentially gives you as a project or as an offeror is um it's a it's a get out of jail free card if you will it's a safe harbor provision so what M essentially does is it says if you want to make an offering in the European Union you need to make certain amount of disclosures about your project about the token about where the capital um that's going to be raised for the offering how that's going to be used where that's going to go and if you properly disclose that along with some risk factors about um about purchasing this token if you get sued or if you're accused of of certain wrongdoing absent fraud or anything that you know um sort of ethically or morally wrong but sort of the the the large portion of the sort of classic plaintiff's actions or regulatory actions that you might face with an unregistered offering ma essentially says you can use this Safe Harbor um to to to get get yourself some protection and that's a really big thing I think the really interesting thing about MAA is its impact on on us regulation in a lot of ways you know like Vincent said I I'm also a very patriotic American I think you know uh uh we've seen over the last 20 years incredible amount of innovation come out of the United States and so uh the but the US is I think very much at risk of diluting its importance uh in the next generation of blockchain and web 3 development so so the situation we're in right now is there's this forcing function that's been created by MAA where there is a viable pathway now so if you're a project you want to make a regulated offering you can go to the European Union you can make that offering in the EU and that's not something you can do in the United States yet and and so to me that that's a that's a very real forcing function that has put the US in a pretty difficult uh position to try to get it right and and you can fundraise through MAA right as well with the to yeah yeah that's exactly what it's for it's for Capital formation and you can make direct offerings I mean I think you and I talk a lot about this internally uh at work but um you know i' I'd love to hear your thoughts on you know how distribution how sort of you know Fair launches uh how that how that that that that meta has sort of changed well well me so just picky backing off the m point m is really interesting because it it's like almost the first of its kind standard right so it's a standard on like disclosure requirements it's a standard on uh road map requirements and it allows you to fund raise right in a generally compliant Manner and that's not something we've had previously right we've had the we had the Ico era previously we've had these like Fly by Night like pre-sales and meme coins and sniping of tokens and so it's like to your your point on Clarity lack of clarity um allows for this like vacuum to to happen for for Bad actors to extract Capital um from what would otherwise be going to you know middle the road packs uh teams who would like to fund raise have a good product but need to do it in a legally compliant Manner and and so when we talk about Concepts around like retail fairness um disclosure requirements for tokens like there are really no standards in crypto like I've read you know we've probably read hundreds if not thousands of white papers collectively and each one of them is just as different or unique as the other and so what at least I'm not the M expert here you are but um what it sounds like ma can do is it can provide this disclosure requirement and standard such that there is standard documentation for teams who want to go out to Market rais from retail and have a successful tge and a compliant and that's what's really exciting to me because um on the toonomic side you know it's kind of like a it's like a it's like a well hidden secret that teams are at no Liberty to disclose anything really if you look at a lot of the recent TGs that have gone out their documentation is very different what you see on for instance uh Team circulating Supply on on one hand will be very different than what they disclose uh or what another team discloses separately and the unlock uh schedule of the tokenomics specifically changes very very widely right so if we come up with these like disclosure requirements or at least some type of standard of accounting for tokens and road map and whatever else then that'll at least help inform Savvy retail investors around what they're buying um what the PO potential delution effects are from Supply overhangs from tokens because I could probably point to five like major infrastructure tokens that have huge you know unlocks at the 12-month Cliff that they don't necessarily disclose but you can see on the chart um a lot of teams like obate what their token is because they have no requirement to disclose what comprises the unlock schedule and the terms of the unlock um it's it's very it's it's very wide and varying and so what Ma could potentially be if teams adopted in in scale and if it somehow gets adopted in the US is really a step in the right direction to protect retail um inform retail at least maybe not protect but inform retail as to what they're buying and give teams the opportunity to form capital in a rather compliant manner that they haven't done previously yeah I think that's right I mean and Vincent and I talk a lot about this of course um I I think you know to my my question at the top of the talk uh to Vincent which is like you know are you seeing fatigue and I think you you know you you can you can take that question to me in a couple of different things I I think one area of fatigue that we've we've talked about and I think everyone here is is is aware of and probably has felt in some respects is the typical fact pattern where a project says we want to do a fair launch we want to make you know an efficient offering to retail but then when you look behind the scenes right you it's not it's not actually a fair launch it's not actually a direct to Market um in the sense that you would think of it as um you have you know you've raised all of this VC money you have all of these you know not so favorable unlocks if you're a retail and then you're sort you know building this marketing machine that sort of tries to couch the project at this sort of Highly Equitable direct to Market Fair launch but you don't actually end up getting that is that right yeah so I think people are just tired of being scammed like and scamm people are tired of being scammed yeah I'm tired of being scammed but um and then scammed is like a word that like we throw around like very Loosely in this industry but you know if you get scammed on like a meme coin right or some type of you know pump fun token like that's like that's kind of part for the course right like you're you know like that's almost to be expected but um this kind of like bad acting from VC backed infrastructure utility tokens is kind of where the disclosure requirements come and come come into play and what memecoins did right was they called out low float High fdv tokens I'm talking about the meme coins of last year like literally right around this time eth Denver um like popcat with like the the large like what we used to be called considered Blue Chips um made exchanges like binance coinbase okx call out low float High fdv tokens right because they're extremely predatory to um to retail investors and where I think you know hopefully where we can go for VCB infra infrastructure tokens is to to to really try to optimize for being on the side of fairness um in terms of like retail investability and and part of that is comprised of like your launch valuation right so launching out a you know very very high like FTV in the terms of like multi-billions you know that that's like the first thing that I think a retail investor is going to look at is like am I going to bid this token at810 billion fdv right the amount of liquidity they'll take to run it up to 2x right is like almost impossible to to achieve at least in today's conditions like what is the flow right is the float um healthy is it like is the composition of the float actually real right like is that liquidity actually there um the treatment of like Insider tokens too like it shouldn't be allowed for teams to stake and uh vote like with their lock tokens right because that that dilutes their their yield from retail that dilutes the voting quality and and and the efficacy of that vote um airdrop distributions too right like if you're you know kind of like working grinding like a protocol hand inand with the team um the quality in which the air drops are being distributed I think Fray as Cycles uh heat up right um so yeah those are kind of like a few things that help drive like the investability of tokens that hopefully um more of the VC back tokens like uh adhere to or at least think about deeper yeah I I think we're our time is up but I think some some like final parting thoughts on the regulatory side you know sort of in terms of like driving this to action look out for the SEC I think Duna is quite interesting it's a you know it's it's an ability to actually wrap a lot of the onchain activity that's happening and also for a way for projects to capitalize on being in the US made in America I think we'll see a lot of hybrid with you know existing offshore structures but also I think we'll start to see Duna become more and more prominent and you know hopefully we'll look out for the SEC and get some sort of sandbox rule that enables innovators to come into the space and uh really build something great here in the US I would also say if you're if you're you know launching a token for your protocol and we had slides too which didn't end up here but you can talk to us after um yeah it's good just like consider the tradeoffs you make around um fairness and like this new stakeholder that you'll have to kind of appease which is the retail investor right because like price is attention and attention is price um so it's really important to kind of think through that as you go through your launch and and consider that third stakeholder that you didn't have previously which is the retail liquid investor thanks everyone