Define Risk Disclosures and Legal Liability
This step requires you to formally define, disclose, and accept the legal, financial, and operational risks associated with the tokenization project. These risks must be communicated to all relevant parties (investors, service providers, platforms) through a unified, written statement.
Objective
To ensure the issuer:
Acknowledges all known risks related to the project and legal structure.
Discloses those risks clearly and transparently to all parties.
Limits liability through the assumption of risk and waiver provisions.
Complies with regulatory standards for investor disclosures.
Key Risk Categories to Include
Regulatory Risk – Uncertain or changing classification of tokenized assets
Market Risk – Price volatility, illiquidity, or token devaluation
Asset Risk – Underperformance, legal claims, encumbrances
Technology Risk – Smart contract bugs, exploits, system failure
Legal Structuring Risk – Jurisdictional enforcement or SPV breakdown
Tax Risk – Unclear or evolving investor tax obligations
Custody Risk – Asset loss, mismanagement, or third-party failure
Force Majeure Risk – Political, environmental, or economic disruption
Liquidity Risk – Inability to resell or trade tokens
Token Performance Risk – Yields or returns may not materialize
Required Documents
The issuer must upload a signed Risk Disclosure and Liability Statement, which includes:
A complete list and description of the risks outlined above
A declaration that the issuer assumes responsibility for risks within its control
Legal limitation of liability for market, technological, and external factors
Clauses indemnifying platform operators and investors from misrepresentation
A governing law provision and the date of acceptance
Purpose of This Step
Investor Protection – Ensures token holders understand the full risk exposure.
Issuer Protection – Limits liability for events outside the issuer's control.
Regulatory Compliance – Satisfies disclosure requirements under securities laws.
Legal Integrity – Establishes enforceable terms for dispute resolution.
Note: If desired, Stobox can provide a customizable legal template for this disclosure, adapted by jurisdiction or token model.
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