Tokenisation should only be used as a funding tool for a specific blockchain-based solution or product, with the token fulfilling specific functions.
Token buyers should be able to understand the features and functionality of the tokens they buy, as well as challenges and risks of development, benefits of using the issuer’s network and plans for allocation of raised funds by the project team.
In the process of tokenisation, operational risks, including cyber security risks, as well as financial, reputational and regulatory risks should be properly addressed.
Token issuers should ensure that information about all transactions and management decisions is traceable, properly documented, archived and stored in accordance with applicable legislation and business practices.
Token issuers should take effective steps to prevent insider trading and market manipulation activities.
Recommended due diligence procedures include ensuring a qualified and professional project team with relevant competencies, the use of an open and transparent blockchain protocol, committing to using well-known token standards and undertaking at least one independent security audit and a thorough analysis of the code and potential bugs before launching a tokenisation campaign.