Top Agreements Crypto/NFT Startups Need

Published: June 5, 2023 • NDA, Stocks, Crypto & NFTs

Contents

Non-Disclosure Agreements (NDAs)

Non-Disclosure Agreements, commonly known as NDAs, are fundamental to any business that deals with confidential information. In the crypto/NFT world, this could encompass everything from business strategies and proprietary algorithms to user data and new project plans.

An NDA serves to protect such sensitive information by legally binding the recipient to keep it confidential. It sets out the parameters of what can and cannot be done with the information disclosed.

Key clauses in an NDA include:

Definition of Confidential Information: This clause specifies what information is considered confidential. In a crypto/NFT context, this could include proprietary technology, business strategies, customer lists, and more.
Obligations and Exceptions: This outlines the recipient’s obligations to protect the confidential information and any exceptions to these obligations. Exceptions often include information that’s publicly known or independently developed by the recipient.
Return or Destruction of Confidential Information: This clause requires the recipient to return or destroy all confidential information upon termination of the agreement or at the discloser’s request. It ensures that no remnants of the confidential information remain in the recipient’s possession after the agreement ends.
No License/Warranty: This states that the NDA does not grant any rights or licenses to the confidential information, and that the information is provided “as is,” with no warranties of any kind.
No Solicitation: This prevents the recipient from soliciting the discloser’s employees, clients, or other business contacts, protecting the discloser’s business relationships.
Term and Termination: This sets out how long the NDA is in effect and conditions for its termination.
Remedies for Breach: This explains what happens if the agreement is violated, often including provisions for damages or injunctive relief.

These clauses ensure that sensitive information is kept under wraps, protecting your startup from potential harm that could arise from an unwarranted disclosure.

Founders’ (Partnership) Agreement for Crypto/NFT Startups

A Founders’ Agreement for a Crypto/NFT startup still maintains the fundamental elements of a traditional Founders’ Agreement but it also takes into account the unique factors associated with blockchain technology and the emerging legal and regulatory landscape of cryptocurrencies and digital assets.

Here are additional key clauses that should be considered for a Founders’ Agreement in the crypto/NFT space:

Token Allocation: In addition to equity ownership, a crypto/NFT startup’s Founders’ Agreement should also address token allocation. This can detail how many tokens each founder will receive and when, as well as any conditions or restrictions on the sale of these tokens.
Blockchain Governance: The agreement should address the governance of the blockchain platform, particularly if the startup is developing its own blockchain. This could include how decisions about changes to the platform will be made and who will have the authority to make those decisions.
Intellectual Property Specific to Crypto/NFT: The agreement should specify who owns the IP rights to any unique blockchain technology, algorithms, or digital assets developed by the startup. It should also cover the use and licensing of this technology.
Regulatory Compliance: Given the evolving regulatory landscape for crypto/NFT startups, the agreement should include a commitment to comply with all relevant laws and regulations, both domestically and internationally. This can include securities laws, AML/KYC regulations (see our KYC/CIP requirements guide), and data privacy rules.
Risk Disclosures: The agreement should acknowledge and accept the specific risks associated with crypto/NFT startups, such as regulatory risk, technological risk, market risk, and more.
Dispute Resolution in Decentralized Systems: Traditional dispute resolution methods may not be applicable or effective in a decentralized blockchain environment. The agreement should specify how disputes will be resolved, potentially including blockchain-specific methods such as on-chain voting or decentralized arbitration.

Here are the key clauses typically included in a Founders Agreement that are also commonly found in all partnership agreements generally:

Management and Decision-Making Authority: This clause outlines the decision-making processes and authority structure within the partnership. It specifies how major decisions will be made, whether by unanimous consent, majority vote, or based on a specific percentage of ownership.
Capital Accounts and Contributions: This details the initial capital contributions made by each partner and specifies any future capital contributions required. It defines how the capital accounts will be maintained, including any interest or allocation adjustments.
Profit and Loss Allocation: This clearly defines how profits and losses will be allocated among the partners. This could be based on capital contributions, ownership percentages, or other agreed-upon methods.
Partner Responsibilities and Roles: This outlines the responsibilities and roles of each partner within the partnership. It can include specific duties, areas of expertise, or operational tasks assigned to each partner.
Withdrawal or Dissolution: This specifies the conditions under which a partner may withdraw from the partnership or the circumstances that would trigger the dissolution of the partnership. It outlines the process for handling the distribution of assets and liabilities in the event of dissolution.
Non-Competition and Non-Solicitation: These clauses restrict partners from engaging in similar business activities or soliciting the partnership’s clients, customers, or employees for a specified period of time after the partnership ends.
Dispute Resolution: This defines the process for resolving disputes between partners. It can include methods such as mediation, arbitration, or litigation, and specify the jurisdiction where disputes will be resolved.
Intellectual Property Rights: This addresses how intellectual property rights, such as patents, trademarks, or copyrights, will be handled within the partnership. It determines whether any intellectual property developed during the partnership will be jointly owned or individually owned by specific partners.
Confidentiality and Non-Disclosure: These provisions protect sensitive business information and trade secrets. They specify the obligations of each partner to maintain confidentiality both during and after the partnership.
Succession Planning: This includes provisions that address the succession of partners, including how new partners may be admitted or how the partnership may continue in the event of a partner’s retirement, disability, or death.

By establishing clear expectations and procedures, a well-drafted partnership agreement can help ensure a successful collaborative endeavor in the crypto/NFT space. This document forms the foundation for your partnership and serves as a guide for navigating the business relationship.

NFT Licensing Agreements

NFTs (Non-Fungible Tokens) have transformed the way digital assets are owned and traded, opening up new possibilities for artists, creators, and collectors. At the heart of these transactions are NFT Licensing Agreements, which govern the terms under which digital assets are used.

The importance of these agreements can’t be overstated – they help clarify the rights of the owner of the NFT (which often doesn’t include full intellectual property rights to the digital asset), protect the rights of the creator, and provide legal certainty in a rapidly evolving field.

Here are the key sections typically included in an NFT Licensing Agreement:

Description of the Asset: This defines the digital asset being licensed, including its unique attributes or features.
Grant of License: This section describes the rights being granted to the NFT holder. This might include rights to display, use, or sell the digital asset, but typically does not include rights to reproduce, distribute, or create derivative works from the asset.
Limitations on Use: This outlines any restrictions on how the NFT can be used. For example, the NFT holder might be prohibited from using the asset in a way that is defamatory, obscene, or infringing on the rights of others.
Term and Termination: This details the duration of the license and the conditions under which it can be terminated.
Fees and Payment: If the license is not granted as part of the initial sale of the NFT, this section specifies any licensing fees and how they should be paid.
Representation and Warranties: This includes promises made by the creator, such as their assertion that they own the rights to the digital asset and have the authority to license those rights.
Indemnity and Liability: This section provides for indemnity in case of losses arising from a breach of the agreement and outlines the liability of each party.
Dispute Resolution: This outlines how disputes arising under the agreement will be resolved, often specifying arbitration or mediation and a choice of law.

Token Sale Agreements

Token Sale Agreements, also known as Initial Coin Offering (ICO) or Initial Exchange Offering (IEO) agreements, are unique to the crypto/NFT space. They govern the sale of tokens or coins to early backers, often as a way of raising funds for a new project.

Given the complexities of such sales and the regulatory scrutiny they can attract, it’s crucial to have a well-drafted Token Sale Agreement that protects your startup’s interests and complies with all applicable laws and regulations.

Here are the key clauses typically included in a Token Sale Agreement:

Description of the Token: This clause defines the token being sold, including its name, symbol, and technical specifications. It also explains the token’s functionality and use case within the project’s ecosystem.
Token Sale Terms: This details the terms of the token sale, including the price per token, the total number of tokens being sold, the start and end dates of the sale, and any conditions or procedures for purchasing the tokens.
Rights and Obligations of Token Holders: This specifies the rights that token holders will have, such as voting rights or profit-sharing rights, as well as any obligations they may have, such as compliance with certain procedures or policies.
Representations and Warranties: This includes promises made by the parties, such as the startup’s assertion that it has the right to sell the tokens and the purchaser’s assurance that they are legally able to buy the tokens.
Risk Disclosures: Given the volatile and uncertain nature of the crypto/NFT space, this section outlines the risks that purchasers are accepting when they buy the tokens. This could include market risk, regulatory risk, technological risk, and more.
Limitation of Liability: This clause limits the startup’s liability, often stating that the tokens are sold “as is” and that the startup is not responsible for any losses the purchaser may suffer.
Compliance with Laws and Regulations: This affirms that the token sale will comply with all applicable laws and regulations, including securities laws and anti-money laundering (AML) rules. It may require purchasers to provide certain information or make certain representations to ensure compliance.

Corporate Bylaws, LLC Operating Agreements

Regardless of whether your startup operates in the crypto/NFT space or elsewhere, Corporate Bylaws (for corporations) and Operating Agreements (for LLCs) are critical. These documents outline your company’s internal operations and governance, such as shareholder meetings, board of directors’ decisions, and general management of company affairs.

Key sections typically included in Corporate Bylaws or an Operating Agreement include:

Company Structure and Management: This section outlines the roles of directors, officers, and managers, how they’re appointed or elected, and the process for their removal.
Member’s/Shareholder’s Roles and Responsibilities: This section outlines the specific roles and responsibilities of members or shareholders, including any obligations related to contributions, voting rights, and participation in company affairs.
Active vs Passive Investors: Defines the rights and responsibilities of active investors (those involved in the company’s operations) and passive investors (those who invest capital but aren’t involved in operations).
Voting and Non-voting Members/Shares: Explains the rights associated with voting and non-voting shares, including the matters that require a vote and the number of votes needed for various decisions.
Meetings: Details the procedures for meetings, including the frequency, notice requirements, quorum rules, and voting procedures.
Capital Contributions and Distributions: Outlines the funding of the company through member or shareholder contributions and the procedure for distributing profits.
Right of First Refusal: This clause restricts members/shareholders from selling their interest in the company without first offering it to the other members/shareholders.
Transfer of Shares or Membership Interest: Sets the rules for the sale or transfer of ownership interest in the company.
Dissolution: Describes the process for dissolving the company, including the distribution of assets among members/shareholders.
Amendments: Describes the procedure for making changes to the bylaws or operating agreement.
Dispute Resolution: Details the procedure for resolving internal disputes, often specifying a method like mediation or arbitration.

Well-crafted bylaws or an operating agreement provide a sturdy foundation for your startup’s operations and governance, helping prevent disputes and ensure smooth operations.

Service Contracts

Service Contracts, also referred to as Service Level Agreements (SLAs) or Service Agreements, are essential for crypto/NFT startups, especially those that rely on third-party vendors for key business operations. These could range from software development and maintenance to marketing, cloud services, and more.

A Service Contract sets the tone for the relationship between your startup and the service provider. It clarifies the expectations and responsibilities of both parties, which can help prevent misunderstandings and disputes down the line.

Here are the key clauses typically included in a Service Contract:

Scope of Work: This clause outlines in detail the services to be provided, the standards expected, and the goals to be achieved. In a crypto/NFT startup, this could range from the development of a blockchain application to the management of a social media campaign.
Payment Terms: This defines the amount to be paid, when payments are due, and the method of payment. It may also include provisions for additional costs or expenses, penalties for late payment, and conditions for changes in payment terms.
Term and Termination: This specifies the duration of the contract and the conditions under which the contract can be terminated by either party. It may also include provisions for contract renewal.
Confidentiality: Much like in an NDA, a confidentiality clause in a Service Contract prevents the service provider from disclosing sensitive business information obtained in the course of providing services.
Indemnification: This clause protects your startup by requiring the service provider to compensate for any harm or loss caused due to their negligence, misrepresentation, or violation of the terms of the contract.
Intellectual Property Rights: This is crucial for tech startups. This clause specifies who owns the intellectual property created in the course of the service. In most cases, the startup would want to ensure they own the IP related to their business.
Dispute Resolution: This sets out the methods for resolving potential disputes, whether through mediation, arbitration, or litigation. It also typically includes a choice of law and venue provision, which determines the jurisdiction and laws that will govern the contract.

A well-drafted Service Contract provides a clear framework for your relationships with service providers, ensuring you receive the services you need while protecting your startup’s interests.

Intellectual Property (IP) Agreements

Intellectual Property (IP) Agreements are a cornerstone for any tech-focused startup, including those in the crypto/NFT space. These agreements ensure the protection of the innovative technologies, designs, and brand elements that give your startup its competitive edge.

IP Agreements can take many forms, including patent licenses, copyright licenses, trademark licenses, and trade secret agreements. They can be used to secure your startup’s rights to use certain IP, to grant others rights to use your IP, or to transfer IP rights entirely.

Here are the key clauses typically included in an IP Agreement:

Definition of Intellectual Property: This clause identifies the specific IP that is the subject of the agreement. In a crypto/NFT startup, this could include software code, algorithms, designs, logos, trademarks, patents, and more.
Ownership of Intellectual Property: This specifies who owns the IP. If the agreement is for a license, it will state that the original owner retains ownership. If it’s an assignment, it will state that ownership is transferred to the other party.
Scope of License: If the agreement is a license, this clause defines the extent of the rights granted. This could specify whether the license is exclusive or non-exclusive, whether it allows sublicensing, the geographic area in which the IP can be used, and the specific uses that are permitted.
Payment Terms: If the agreement involves a license or assignment of IP, it will specify the compensation to be paid. This could be a one-time payment, recurring royalties, or a combination of both.
Confidentiality: Much like in an NDA, a confidentiality clause in an IP Agreement prevents the disclosure of sensitive information related to the IP.
Warranties and Representations: This section includes promises made by the parties, such as the IP owner’s promise that they own the IP and that it doesn’t infringe on anyone else’s rights.
Indemnification: This clause requires one party to compensate the other for certain harms, such as infringement claims brought by third parties.
Term and Termination: This specifies the duration of the agreement and the conditions under which it can be terminated.
Dispute Resolution: This outlines the methods for resolving potential disputes, including the choice of law and venue.

IP Agreements are a key tool for protecting your startup’s valuable IP assets, allowing you to safely collaborate with others, monetize your IP, and guard against infringement.

Employment Agreements

Employment Agreements are crucial for any startup, including those in the crypto/NFT space. These agreements establish the terms and conditions of employment between your startup and its employees, providing clarity and reducing the risk of future disputes.

Here are the key clauses typically included in an Employment Agreement:

Job Description: This outlines the role and responsibilities of the employee. It provides clarity about what is expected from the employee in terms of duties and performance.
Compensation and Benefits: This section details the employee’s salary or wages, as well as any additional benefits, such as health insurance, retirement contributions, stock options, or bonuses.
Term and Termination: This specifies the duration of the employment contract and the conditions under which it can be terminated, including provisions for notice periods and severance.
Confidentiality: This clause prevents the employee from disclosing sensitive business information, both during and after their employment.
Intellectual Property (IP) Rights: This is particularly important for tech startups. This clause typically states that any IP created by the employee during their employment belongs to the company.
Non-Competition and Non-Solicitation: These clauses prevent the employee from competing with your startup or soliciting your customers, clients, or other employees, for a certain period after their employment ends.
Dispute Resolution: This outlines the methods for resolving potential disputes between the employer and employee, often including an agreement to arbitrate disputes rather than going to court.

Employment Agreements are a vital part of your startup’s relationship with its employees. They help set clear expectations, protect your startup’s interests, and provide a basis for addressing any issues that may arise during the employment relationship.

Stock Transfer Agreements

As a crypto/NFT startup grows and evolves, there may be situations where the transfer of company stock becomes necessary. This could occur in the context of new investors, employee stock options, or changes in the existing ownership structure. In such cases, a Stock Transfer Agreement is used to formally document the transaction and protect the interests of all involved parties.

Here are the key clauses typically included in a Stock Transfer Agreement:

Parties Involved: This section identifies the current owner of the stock (the “transferor”) and the new owner (the “transferee”), along with their contact information.
Details of the Stock: This clause specifies the number of shares being transferred, the type of stock (common or preferred), and the par value of the shares.
Transfer Price: This outlines the price per share that the transferee will pay to the transferor, or it could indicate if the transfer is a gift.
Payment Terms: This describes the method of payment and any payment schedule, if applicable.
Representations and Warranties: Both the transferor and transferee make certain assurances in this section. For example, the transferor might warrant that they are the legal owner of the stock and have the right to transfer it, while the transferee might warrant that they have the financial ability to pay for the stock.
Confidentiality: This clause may require the transferee to keep confidential any sensitive information about the company that they learn as a result of the stock transfer.
Governing Law and Jurisdiction: This indicates the state or country whose laws will govern the agreement and where any legal disputes will be resolved.
Dispute Resolution: This outlines the methods for resolving potential disputes, whether through negotiation, mediation, arbitration, or litigation.

Properly documenting stock transfers is crucial for maintaining accurate company records and avoiding potential legal disputes. A Stock Transfer Agreement provides a clear and legally sound framework for these transactions.

Privacy Policies

In an era where data privacy and protection are of paramount importance, Privacy Policies serve as a key legal document for any startup, especially those operating in the digital realm like crypto/NFT startups. This policy outlines how your startup collects, uses, stores, and shares personal data from your users. In many jurisdictions, having a Privacy Policy is not only best practice but is also legally required, especially if you collect data from users in the European Union (under GDPR) or California (under CCPA).

Here are the key sections typically included in a Privacy Policy:

Types of Data Collected: This section details what personal data your startup collects from its users. This can include things like names, email addresses, IP addresses, cookies, and other online identifiers.
How Data is Collected: This explains the methods used to collect data, such as through form submissions, cookies, log files, and third-party tools.
Purpose of Data Collection: This explains why your startup collects each type of data and how it will be used. This can include purposes like improving services, communicating with users, complying with legal obligations, and more.
Data Sharing and Disclosure: This section outlines the circumstances under which your startup might share user data with third parties. This could include sharing with service providers, in connection with a business transfer, or to comply with legal requirements.
Data Protection Measures: This part reassures users about the security measures in place to protect their data from unauthorized access, alteration, or destruction.
User Rights: This part informs users about their rights regarding their personal data, such as the right to access, correct, or delete their data, or to object to certain uses of their data.
Policy Updates: This section explains how and when the Privacy Policy may be updated, and how users will be informed about any changes.

A comprehensive and transparent Privacy Policy not only helps you comply with legal requirements but also builds trust with your users by reassuring them about the safety and privacy of their data.

In the next section, we’ll discuss User Agreement/Terms of Service, another vital legal document for crypto/NFT startups. As always, please feel free to provide any feedback or specific requests for the upcoming sections.

User Agreement/Terms of Service

User Agreements, also known as Terms of Service or Terms and Conditions, are another critical legal document for any online business, including crypto/NFT startups. This agreement sets the rules for using your platform and outlines the relationship between your startup and its users.

Here are the key sections typically included in a User Agreement:

Acceptance of Terms: This clause makes it clear that by using the platform, users are agreeing to abide by these terms.
Description of the Service: This outlines what your platform does and what services it provides.
User Obligations: This details what is expected of users when they use your platform, including any rules or restrictions on behavior.
Intellectual Property Rights: This clarifies who owns what on the platform – usually, your startup will own all the platform’s content, while users will retain ownership of their own uploaded content.
Dispute Resolution: This section outlines how disputes between your startup and a user will be resolved, often including an agreement to arbitrate disputes rather than going to court, and a choice of law provision.
Limitation of Liability and Disclaimer of Warranties: This clause limits your startup’s liability to users and disclaims certain warranties, which can be crucial in protecting your startup from legal claims.
Privacy: This refers users to your Privacy Policy for information about how their data is collected, used, and protected.
Termination: This outlines the conditions under which a user’s account may be terminated, and what happens to a user’s data and content upon termination.
Changes to the Agreement: This section details how changes to the User Agreement will be made and communicated to users.

A well-drafted User Agreement protects your startup by setting clear rules for using your platform, reducing your legal risk, and helping to manage user expectations.

Next, we’ll discuss Software Development Agreements, an important consideration for tech-focused startups. As always, feel free to provide any feedback or specific requests for the upcoming sections.

Token Custody Agreements

In the crypto/NFT space, Token Custody Agreements are essential documents that govern the relationship between a token owner and a custodian. A custodian in this context is a third-party entity entrusted to hold and safeguard the crypto assets or NFTs. These agreements are crucial for ensuring the security of tokens, particularly in an industry where the risk of theft or loss can be high.

Here are the key sections typically included in a Token Custody Agreement:

Scope of Custody Services: This outlines the services the custodian will provide, such as safekeeping of tokens, transaction processing, or additional services like insurance or reporting.
Custodial Wallets and Private Keys: This section provides details on how the tokens will be stored. It typically includes a description of the custodial wallets, the handling of private keys, and any additional security measures.
Transaction Authorization and Execution: This section defines the procedures for authorizing and executing transactions involving the tokens. It outlines how transaction instructions will be given and verified, and how transactions will be executed.
Fees and Charges: This specifies the fees the custodian will charge for its services and how these fees will be paid.
Risk Disclosures and Liability: This part acknowledges the risks involved in token custody and sets out the custodian’s liability in case of loss or theft. It often includes disclaimers and limitations of liability.
Termination: This section explains the conditions under which the agreement can be terminated and what happens to the tokens in case of termination.
Confidentiality: This clause ensures that the custodian will keep all information related to the token owner and their assets confidential, except as required by law or agreed in writing.
Regulatory Compliance: This section affirms that the custodian will comply with all applicable laws and regulations, and may include specific provisions related to anti-money laundering (AML) and know-your-customer (KYC) rules.