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A Token Sale Agreement sets out the legal terms when a company sells digital tokens or cryptocurrency to investors in Canada. It's similar to a traditional securities purchase agreement but specifically tailored for blockchain-based assets and must comply with Canadian securities regulations.

These agreements protect both token issuers and buyers by clearly defining key details like token price, sale mechanics, usage rights, and investment restrictions. They typically include important safeguards required by provincial securities commissions and often incorporate anti-money laundering provisions aligned with FINTRAC guidelines.

Use a Token Sale Agreement when launching a cryptocurrency or digital token offering in Canada to raise capital from investors. This essential document becomes necessary as soon as you begin planning your token sale, ideally months before any public announcements or marketing efforts.

The agreement proves particularly valuable for tech startups and blockchain companies seeking regulatory compliance with provincial securities laws. It helps establish clear terms with early investors, prevents legal complications during token distribution, and provides the documentation required by Canadian financial regulators and banking partners.

• Public Token Sales: Designed for broad investor participation, these agreements include detailed disclosure requirements under Canadian securities laws and often feature graduated vesting schedules
• Private Placement Token Sales: Used for accredited investors only, with simplified disclosure requirements but stricter investor qualification checks
• SAFT-Based Agreements: Future token rights agreements that comply with both securities and cryptocurrency regulations while managing pre-functional token sales
• Utility Token Sales: Focus on tokens with specific platform usage rights, emphasizing consumer protection and service access terms

• Token Issuers: Tech companies, blockchain startups, or established businesses launching digital tokens who need to structure their sale legally
• Securities Lawyers: Draft and review agreements to ensure compliance with Canadian securities regulations and provincial requirements
• Investors: Both accredited and retail investors purchasing tokens through the sale, subject to eligibility requirements
• Regulatory Bodies: Provincial securities commissions and FINTRAC who oversee token sales and enforce compliance
• Financial Institutions: Banks and payment processors facilitating the token sale transactions and conducting due diligence

• Token Details: Document your token's technical specifications, utility features, and total supply allocation
• Sale Structure: Define pricing tiers, vesting schedules, and minimum/maximum purchase limits for different investor categories
• Regulatory Review: Confirm which provincial securities exemptions apply and prepare required disclosure documents
• KYC/AML Process: Establish investor verification procedures that meet FINTRAC requirements
• Distribution Plan: Map out token delivery mechanics, including smart contract details and security measures
• Risk Assessment: List potential technical, regulatory, and market risks for comprehensive disclosure

• Token Description: Detailed specifications of the digital asset, including technical features and utility functions
• Purchase Terms: Price, payment methods, minimum/maximum investment amounts, and token allocation details
• Investor Rights: Voting privileges, profit sharing arrangements, and token usage parameters
• Compliance Declarations: Securities law exemptions, KYC/AML requirements, and residency restrictions
• Risk Disclosures: Market, technical, and regulatory risks specific to Canadian token offerings
• Distribution Terms: Token delivery timeline, vesting schedules, and lock-up periods
• Governing Law: Jurisdiction clause specifying applicable provincial and federal laws

A Token Sale Agreement differs significantly from a Simple Agreement for Future Tokens (SAFT) in several key aspects, though both are used in cryptocurrency fundraising.

• Timing of Token Delivery: Token Sale Agreements facilitate immediate token transfers upon payment, while SAFTs promise future token delivery once the network launches
• Regulatory Treatment: Token Sale Agreements typically handle fully functional tokens, whereas SAFTs are explicitly structured as investment contracts under Canadian securities laws
• Risk Profile: SAFTs carry higher development risk since they deal with pre-functional tokens, while Token Sale Agreements govern existing, operational tokens
• Investor Rights: Token Sale Agreements grant immediate ownership and usage rights, but SAFTs only provide a contractual right to receive tokens in the future