Practice / 02 of 05

Digital Assets and Protocols

For protocol developers, ecosystem foundations and the businesses built on their networks.

The practice

Institutions, protocols and the agreements between them.

We work where protocols, custodians, banks and exchanges contract with one another. A protocol usually starts with a token document, a set of terms and a foundation, and the job is to build them so they hold when a bank becomes the counterparty.

The questions stay the same throughout: who bears which risk when the technology fails, who pays for which phase of the work, and whether the architecture does what the terms say.

Plenty of the work comes earlier than a bank integration, like a first token document, a grant agreement or a terms-of-service refresh before a launch. Those are the documents a bank’s diligence team reads when the integration comes.

Protocol developer Chartered bank Venues company-side qualified custodian lenders and exchanges PHASE 01 PHASE 02 PHASE 03 signing to integration live the next product live institutional scale Base fee, tranche 1: at signing Tranche 2: on go-live Tranche 3, then performance fee on volume Custody-backed asset issued on the network Collateral held under the bank’s charter Tri-party collateral at the custodian PHASE 01 · SIGNING TO INTEGRATION LIVE Protocol developer Chartered bank Base fee, tranche 1: at signing Chartered bank Protocol developer Custody-backed asset issued on the network PHASE 02 · THE NEXT PRODUCT LIVE Protocol developer Chartered bank Tranche 2: on go-live Chartered bank Venues Collateral held under the bank’s charter PHASE 03 · INSTITUTIONAL SCALE Protocol developer Chartered bank Tranche 3, then performance fee on volume Chartered bank Venues Tri-party collateral at the custodian
Who holds what, and who controls the triggers. The bank holds the assets and the collateral under its own charter; the protocol’s fees are released on milestones the protocol can influence.
Selected matters

Custody, ecosystems and platforms.

Custody

Company-side counsel to the developer of a major layer-one blockchain on a multiyear protocol technical support agreement with a federally chartered digital-asset bank, covering qualified-custody collateral and tri-party collateral management.

Ecosystem

Ecosystem support, grant and partnership agreements for a layer-one blockchain foundation, negotiated against counterparty counsel in Asia.

Platforms

Terms of use, privacy and content policies for a smart-contract collaboration platform, reviewed against its wallet, oracle and reward architecture to hold its non-custodial position.

The full list for this practice is on the Selected Work page.

Part 01

Custody, collateral and bridges.

We act for protocol developers when a chartered bank or qualified custodian integrates with the network. The counterparty’s form is written for the counterparty, and knowing which twenty lines matter in a sixty-page form is most of the job.

What we paper
  • Protocol technical support and integration agreements with banks and custodians
  • Bridge and wrapped-asset arrangements
  • Qualified-custody collateral and tri-party collateral management terms
  • Milestone-tranched fees and performance-fee mechanics
  • Liquidity commitments made alongside an integration
  • Liability, confidentiality and audit provisions in custodian forms
Part 02

Protocols, foundations and ecosystems.

Behind a network there are usually two entities: the company that develops the protocol and the foundation that funds its ecosystem. Where a network needs a foundation or DAO vehicle, we form it in the British Virgin Islands or the Cayman Islands with offshore counsel we have worked with for years.

What we paper
  • Ecosystem support, grant and partnership agreements
  • Exchange and infrastructure partnership agreements
  • Token rights and distribution documentation
  • Foundation and DAO formation and governance documents
  • Consulting and services agreements for foundations
  • Funding and approval terms where a foundation pays for an integration
Part 03

Applications and platforms.

For the applications built on these networks, we write the terms of service and the policies behind them, build the anti-money-laundering programs, and do the money-transmission analysis that determines whether the platform can operate as designed. We read those documents as a set, because terms written at different times contradict each other in ways a regulator will find.

What we paper
  • Platform terms of service, privacy and content policies
  • Anti-money-laundering programs and money-transmission analysis
  • Non-custodial architecture review against the terms
  • Participation, contributor and reward terms for smart-contract platforms
  • Capital-provision and revenue-share arrangements
  • Token-based reward and exchange formats, with the securities review they require
Where it starts

How this work usually begins.

  1. An offshore foundation or DAO structure that has to be chosen before the token, not after.

  2. A first token rights document that has to hold for holders in more jurisdictions than the team planned for.

  3. A platform that describes itself as non-custodial and needs to know whether its architecture agrees.

  4. A foundation that needs one ecosystem support agreement it can use across grants and partnerships, negotiated against counsel in several jurisdictions.

  5. A custodian’s form agreement that arrives for an integration the protocol has already announced publicly.

If yours starts somewhere else, it is still worth a conversation.

Writing on this practice

What the matters taught us.

What a Protocol Negotiates When a Chartered Bank Holds Its Collateral

In preparation

The First Token Document and the Bank That Will Read It

In preparation

The One Flow That Breaks a Non-Custodial Claim

In preparation

What each piece argues is on the Writing page.

Bring us the paper, whether it is the bank’s or your own.

We have negotiated against the one and written the other, and we know which lines in each will matter in a year.