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General token due diligence framework: a primer

A general risk framework to evaluate tokens can be organized in a multitude of ways. Some crypto-native firms have produced publicly available frameworks; some regulatory bodies, such as the New York State Department of Financial Services, are known to require coin-listing policies to meet rigorous standards; and other market participants presumably have privately held approaches for assessing tokens. Each of these players has its own risk tolerance thresholds that are driven by the internal risk management appetite specific to an industry or sector and its business model. As such, we have developed a token risk assessment framework that attempts to remain party agnostic and should be of interest to any entity interested in further assessing token risks.

In this framework, we define the following six risk pillars as a general representation of our methodology: reputational and strategic, technical, financial, legal and compliance, cybersecurity and auditability. 

This framework is not all-encompassing, nor do we touch on all subrisk categories in this paper, but it should provide the reader with a preliminary framework that can be further built upon as the industry continues to evolve.