Building in isolation away from corporate legal protections could impact a founder’s success. Speaking at Breakpoint 2022, Lewis Cohen, co-founder of DLX Law said developers who want to create products would need to work with legal professionals to build in line with the right policies. Lewis Cohen spoke in a session moderated by Yelena Cavanaugh of the Solana Foundation.
Cohen said project teams have to be aware of when their tokens become security. The co-founder added that they should also be careful of offers and promises they give to users from development to ICO and to being traded on exchanges.
Nancy Wojtas, Cooley LLP, also added that several factors like the 75 bills at Congress, and the US election will affect policies that will be created around crypto projects. The SEC seems to want to help develop policies for the crypto space; however, the collaboration is yet robust, Nancy added.
Contributing to the conversation, Karen Ubell, Partner at Goodwin Procter LLP, explained saying while we are very focused on helping developers have a good product-market fit, we emphasize that they get legal assistance from the inception of their projects. Achieving business goals within the context of the law is vital and developers whose products will be used in the US need to acquaint themselves with already existing policies to avoid illegalities.
How communication management can affect a project
Lewis highlighted that the composition of a team, internal and external communication is another aspect every crypto startup should pay attention to. With the freedom we have on social media to express ourselves, team members should be careful about what they say and how they say it.
In support of Lewis, Karen cited the case between the SEC and Coinbase, where the SEC stood against the crypto firm because of statements made by Paul Grewal, Chief Legal Officer at Coinbase. Instead of unnecessary online communication and messages, focus on sharing the advantages and utilities behind your project.
Nancy also said that teams building in the crypto space shouldn’t always focus on making money as that can trigger suspicions from policymakers. For those creating tokens, consider your business models and if possible, have a revenue source other than sales of tokens, Lewis added.