A sample token legal opinion letter, with every part annotated

To

The board of directors, Oxbrindle Network Ltd (the “Issuer”)

From

[Name], [jurisdiction]-qualified counsel, for the leg stated against each signature block in Part H

Date

[date]

Reference

[reference]

Re

The Oxbrindle Token (the “Token”): its status under the securities and crypto-asset laws of the United States, the European Union, the Emirate of Dubai and India named in Part A (specimen on invented facts)

Dear Directors,

You have asked for our opinion on the questions set out in Part A. We give it on the documents listed in Part B and the facts and assumptions stated in Part C, subject to the qualifications in Part F. Parts A to H are to be read together. No conclusion in Part E stands apart from them.

A.1You have asked us whether, as at the date of this letter:

(a) United States. The Token is itself a “security” under the Securities Act of 1933 or the Securities Exchange Act of 1934, applying the investment-contract test of SEC v. W.J. Howey Co. as the Securities and Exchange Commission applies it in Release Nos. 33-11412 and 34-105020 of 17 March 2026 (the “Release”); and whether Tokens delivered under the SAFTs described in C.1(5) are subject to an investment contract;

(b) European Union. The Token is a crypto-asset within Title II of Regulation (EU) 2023/1114 (“MiCA”), rather than a financial instrument excluded by Article 2(4)(a), an e-money token or an asset-referenced token, applying the ESAs’ Joint Guidelines JC 2024 28 and ESMA’s Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments (ESMA75453128700-1323); and what MiCA requires of the Issuer for the EU Admission;

(c) Emirate of Dubai. Into which issuance category the Token falls under the Virtual Assets and Related Activities Regulations 2023 and the Virtual Asset Issuance Rulebook effective 19 June 2025 (the “Issuance Rulebook”) of the Virtual Assets Regulatory Authority (“VARA”), and what that category requires for the Public Sale; and

(d) India. The Token is a virtual digital asset under section 2(111) of the Income-tax Act, 2025; how income from its transfer is taxed; and whether the Issuer’s arrangements for the Token engage the activities notified under section 2(1)(sa)(vi) of the Prevention of Money-laundering Act, 2002 (the “PMLA”) by notification S.O. 1072(E) of 7 March 2023.

A.2Laws not covered. Each leg covers only the law named against it in A.1. This letter does not cover the Bank Secrecy Act or any regulation of the Financial Crimes Enforcement Network, the Commodity Exchange Act, the law of any US state, the national law of any Member State of the European Union, UAE federal law, the law of the Abu Dhabi Global Market or of the Dubai International Financial Centre, or the tax law of any jurisdiction other than India as stated in D.4.

A.3The United States leg does not address the Public Sale, which is offered only outside the United States (C.1(7)).

A.4Each leg separately. Each signatory gives only the leg stated against its signature in Part H and expresses no view on any other leg. In each leg, and in the other Parts as they apply to that leg, “we” means the signatory of that leg.

B.1For the purposes of this letter we have examined the following documents, each identified by date in the index kept on our file:

(a) the Issuer’s whitepaper dated [date] and every earlier version published since [date];

(b) the terms and conditions of the Token;

(c) the form of SAFT used for every sale described in C.1(5), and a list of SAFT purchasers with their stated countries of residence;

(d) an archive of the Issuer’s website and official social media accounts from [date] to [date];

(e) the Issuer’s written communications with prospective and actual purchasers, including investor presentations and direct messages;

(f) the smart-contract audit reports dated [date] and the auditor’s scope letter;

(g) the Issuer’s constitutional documents, its register of directors and the board minutes approving the Public Sale and the EU Admission;

(h) the tokenomics and vesting schedule, showing total supply, allocations and unlock dates;

(i) the draft distribution agreement with [Licensed Distributor]; and

(j) every agreement or arrangement with persons who promote the Token, including key-opinion-leader and ambassador agreements.

B.2We have examined no other document. We have not reviewed the Network’s code except as the audit reports describe it.

C.1Facts. We have relied, without independent verification, on the documents in Part B and on the following statements of fact in the certificate of an officer of the Issuer dated [date] (the “Certificate”):

(1) The Issuer is a company incorporated in a free zone of the Emirate of Dubai other than the Dubai International Financial Centre.

(2) The Oxbrindle network (the “Network”) is a public blockchain network on which users pay independent storage operators for data storage through the Network’s protocol, with fees priced and paid in the Token. Its mainnet has operated since [date]. Since then the Token has been usable on the Network to pay those fees, and holders have been able to vote on proposals to upgrade the Network’s software.

(3) The Token confers no right to income, profits, dividends, interest or redemption, and no claim on the Issuer or its assets. No mechanism pays holders a yield or distributes fees to them, and the Issuer has no programme to buy back Tokens.

(4) The Token does not purport to maintain a stable value by referencing any currency, asset or right, or any combination of them. It is the native asset of the Network, not a wrapped, bridged or derivative version of any other asset. It is fungible and can be transferred between wallets without restriction.

(5) Between [date] and [date] the Issuer sold rights to future Tokens under simple agreements for future tokens (the “SAFTs”). It made no offer to any person in the United States and sold only to purchasers it reasonably believed were outside the United States when their buy orders originated. The purchasers paid for their rights, and the Issuer pooled the proceeds to fund development of the Network. Tokens were delivered under the SAFTs at mainnet launch.

(6) The SAFTs, the whitepaper dated [date] and the Issuer’s website stated that the Issuer would build and launch the Network and then deliver the post-launch features in the whitepaper’s roadmap by [date]. They named the Issuer’s development team, set out milestones, a timeline and a development budget funded from the SAFT proceeds, and said that holders would benefit as the Issuer’s work on the Network increased demand for storage paid in the Token. The post-launch milestones have not been reached, and the Issuer has not published any statement that it has completed those efforts.

(7) The Issuer proposes (a) a sale of Tokens to the public outside the United States, placed in and from the Emirate only by [Licensed Distributor], a virtual asset service provider licensed by VARA for Broker-Dealer Services (the “Public Sale”); and (b) the admission of the Token to trading on a trading platform operated by a crypto-asset service provider established in the European Union (the “EU Admission”), which it announced on its website on [date].

(8) The only persons the Issuer has engaged to provide services relating to the placement, sale, distribution or trading of the Token are [Licensed Distributor] and the operator of the trading platform for the EU Admission. Each agreement requires the counterparty not to provide those services to persons resident in India. The Issuer does not market the Public Sale to persons in India and blocks access to the Public Sale page from Indian IP addresses.

C.2Assumptions. We have assumed (a) the genuineness of all signatures and the conformity of all copies to their originals; (b) that each document in Part B is complete and has not been amended; (c) that the Issuer has made no promise about the Token to any purchaser other than in the documents in Part B; and (d) that the Network operates as the audit reports describe.

C.3We have not relied on any statement in the Certificate or elsewhere as to whether the Token is a security, a financial instrument or any other regulated instrument. Those are the conclusions of this letter.

D.1.1The test. The Release applies the investment-contract test of SEC v. W.J. Howey Co. It states that it supersedes the Commission staff’s Framework for “Investment Contract” Analysis of Digital Assets of 3 April 2019 (footnote 21). It sorts crypto assets into five categories: digital commodities, digital collectibles and digital tools, which are not themselves securities; stablecoins, which may or may not be; and digital securities, which are (section III). A non-security crypto asset may still be offered and sold subject to an investment contract, which is a security, without the crypto asset itself becoming a security (section III).

D.1.2The Token. The Release describes a digital commodity as a crypto asset intrinsically linked to, and deriving its value from, the programmatic operation of a crypto system that is functional, and from supply and demand, rather than from an expectation of profits from the essential managerial efforts of others. A digital commodity carries no intrinsic economic rights, such as passive yield or rights to future income, profits or assets of a business (section III.A). The Network is functional in the sense the Release gives that word (footnote 49), because the Token has been usable on it for its programmatic purpose since mainnet launch (C.1(2)), and the Token carries none of those rights (C.1(3)) [illustrative, on assumed facts].

D.1.3The SAFTs. Howey is conjunctive, and the Release confirms that the common enterprise element must be satisfied (footnotes 7 and 144). The SAFT purchasers paid for their rights, and the Issuer pooled those payments to fund the development it promised (C.1(5), C.1(6)), so in our view the investment of money and the common enterprise elements are both met [illustrative, on assumed facts]. Under the Release, where crypto assets are sold under an agreement for delayed delivery, the sale occurs, and the assets become subject to the investment contract, when the agreement is entered into, whenever they are delivered. On delivery they are no longer subject to it where the issuer has fulfilled its representations or promises, or a purchaser would otherwise not reasonably expect profits from the issuer’s essential managerial efforts, for example because the issuer has publicly disclosed that it completed them; otherwise they remain subject to it (section IV.B.1). Whether those efforts are complete is judged by how the issuer itself defined them (footnote 96). The promises in C.1(6) named the team, set out milestones, a timeline and a budget, and explained how holders would profit from the Issuer’s work: the kind of business plan the Release treats as likely to create a reasonable expectation of profit (section IV.A). The post-launch milestones have not been reached and no completion disclosure has been published (C.1(6)), so in our view Tokens delivered under the SAFTs remain subject to the investment contract [illustrative, on assumed facts].

D.1.4Trading. While Tokens remain subject to the investment contract, secondary-market offers and sales of them would be securities transactions where purchasers would reasonably expect the Issuer’s promises to stay connected to the Token (section IV.A).

D.1.5Earlier sales. This letter does not address whether the SAFT sales were registered or exempt. Under the Release, separation from an investment contract does not cure a failure to register an offering or to rely on an exemption, and anti-fraud liability for misstatements made while the contract existed survives separation (section IV.B.3). We have assumed, and express no opinion on, the availability of Regulation S (17 CFR 230.901 to 230.905) for the SAFT sales.

D.1.6Pending legislation. On 15 September 2026 the Senate vote to invoke cloture on the motion to proceed to H.R.3633, the Digital Asset Market Clarity Act, failed, short of the 60 votes required, and nothing in the bill is enacted. This letter gives no weight to its provisions.

D.2.1Classification. Applying the standardised test in the Joint Guidelines JC 2024 28 of 10 December 2024 (paras 17 to 23 and Annex C): the Token is a digital representation of value that can be transferred and stored electronically using distributed ledger technology, and so a crypto-asset under Article 3(1)(5) of MiCA; it is fungible (C.1(4)), so Article 2(3) does not exclude it; it confers none of the rights in C.1(3), and its votes cover only upgrades to the Network’s software (C.1(2)), so it confers no rights equivalent to those attached to shares, bonds or other transferable securities (ESMA’s Guidelines dated 19 March 2025, Guideline 2, paras 13 to 15, 22 and 23); the Network has a general commercial purpose, so the Token is not a unit in a collective investment undertaking (Guideline 4, para 43); it therefore does not qualify as a financial instrument under Article 2(4)(a), and an expectation of future profit is not in itself enough to make it one (para 62); it is not a deposit or any other product listed in Article 2(4); and it does not purport to maintain a stable value by referencing another value or right (C.1(4)), so it is neither an e-money token nor an asset-referenced token. It is a crypto-asset within Title II [illustrative, on assumed facts].

D.2.2The EU Admission. A person may not seek admission to trading of a Title II crypto-asset in the Union unless, among other conditions, it is a legal person and has drawn up, notified and published a crypto-asset white paper (Article 5(1)). The operator of the trading platform may agree in writing to take on those requirements instead (Article 5(3)). The white paper must be notified to the competent authority of the home Member State at least 20 working days before publication, accompanied by an explanation of why the Token should not be considered a crypto-asset excluded under Article 2(4), an e-money token or an asset-referenced token (Article 8(4) and (5)). The competent authority does not approve the white paper before publication (Article 8(3)), and the published version must be identical to the version notified (Article 9).

D.2.3The Public Sale. To the extent the Public Sale is an offer to the public in the Union, the exemptions in Article 4(2) and 4(3) are not available to it, because the Issuer has made known its intention to seek admission to trading (Article 4(4); C.1(7)). The European Commission’s answer to ESMA Q&A 2671 of 21 May 2026 reads admission to trading in Article 4(4) as admission on a trading platform operated by a crypto-asset service provider established in the Union, which the EU Admission is.

D.2.4The Article 8(4) explanation is a separate document, in the template at Annex A to JC 2024 28. We have not prepared it. D.2.1 sets out the analysis on which it can be based.

D.2.5Earlier sales. This letter does not address whether the SAFT sales, or the delivery of Tokens at mainnet launch, complied with MiCA, including Articles 4 and 143(1).

D.3.1Remit. VARA’s remit under the Issuance Rulebook is the Emirate of Dubai, including its free zones but excluding the Dubai International Financial Centre (Schedule 2, “Emirate”). The Issuer is within it (C.1(1)).

D.3.2Category. The Issuance Rulebook places Fiat-Referenced and Asset-Referenced Virtual Assets in Category 1, any Virtual Asset that is neither Category 1 nor Exempt in Category 2, and Non-Transferable and Redeemable Closed-Loop Virtual Assets among Exempt Virtual Assets (Rule I.C.1). The Token references no fiat currency (C.1(4)). We have considered whether it is an Asset-Referenced Virtual Asset under each limb of that definition (Schedule 2). Limb (b) reaches an entitlement to receive or share any Income derived from a real-world asset, and the Token confers no entitlement to Income of any kind (C.1(3)). It represents no ownership of, or entitlement to value derived from or backed by, any real-world asset or Income; it does not purport to keep a stable value or reference any real-world asset or Income; and it is not a wrapped or derivative version of another Asset-Referenced Virtual Asset (C.1(3), C.1(4)). In our view it is not an Asset-Referenced Virtual Asset [illustrative, on assumed facts]. It is transferable between wallets and is not confined to redemption with the Issuer (C.1(4)), so it is not Exempt. It is therefore a Category 2 Virtual Asset, subject to VARA’s power to determine the category on all factors it deems appropriate, including the rights the Token represents and the underlying business model (Rule I.C.2) [illustrative, on assumed facts].

D.3.3Consequences. All placement and distribution of the Token in or from the Emirate must be carried out by a Licensed Distributor (Rule I.E.1). No prior VARA approval is required (Rule I.E.2). The Licensed Distributor assumes responsibility for assuring and validating the Issuer’s compliance with the Issuance Rulebook (Rule I.E.3). Before any placement it must submit the Whitepaper, the Risk Disclosure Statement, a declaration and its due-diligence reports to VARA, and it may not place the Token until a submission period of 15 Working Days has ended (Broker-Dealer Services Rulebook, Rules IV.D.1 to IV.D.3). No Category 2 Virtual Asset is deemed approved by VARA (Rule I.E.5), and every document relating to the Token that the Licensed Distributor distributes, including the Whitepaper, must carry VARA’s prescribed disclaimer (Broker-Dealer Services Rulebook, Rule IV.B.5(a)).

D.3.4Earlier sales. This letter does not address whether the SAFT sales, or the delivery of Tokens at mainnet launch, complied with the Issuance Rulebook, including Rule I.E.1.

D.4.1Status. The Token is a “virtual digital asset” under section 2(111) of the Income-tax Act, 2025, which came into force on 1 April 2026 [illustrative, on assumed facts]. It is a crypto-asset relying on a cryptographically secured distributed ledger (clause (d)). It also falls, in our view, within clause (a), because it is a token generated through cryptographic means that represents value exchanged for consideration, functions as a unit of account for storage fees on the Network and can be transferred electronically (C.1(2), C.1(4), C.1(5)) [illustrative, on assumed facts].

D.4.2Tax on transfer. Income from the transfer of a virtual digital asset is taxed at 30%, before any surcharge and cess, with no deduction other than the cost of acquisition and no set-off or carry-forward of losses (section 194(1), Table Sl. No. 4). A person paying a resident consideration for the transfer of a virtual digital asset must deduct tax at 1% (section 393(1), Table Sl. No. 8(vi)), subject to the thresholds in section 393(4), which turn on who pays.

D.4.3PMLA. S.O. 1072(E) notifies five activities carried out for or on behalf of another person in the course of business, of which the fifth is participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset. FIU-IND’s guidelines, updated as on 8 January 2026, treat persons offering services relating to the issuance, offer, market making, placement, sale, distribution and trading of a virtual digital asset as reporting entities, state that performing those functions through a smart contract does not relieve the persons who control it, and state that ICO and ITO-related activities are strongly discouraged (para 7.1). Those obligations are activity-based and apply whatever the provider’s physical presence in India (para 1.4). On the facts in C.1(8), the only persons engaged for the placement, sale, distribution or trading of the Token are [Licensed Distributor] and the operator of the trading platform for the EU Admission; each is bound by contract to exclude persons resident in India, and the Issuer blocks Indian IP addresses from the Public Sale page. In our view neither provides those services to persons in India [illustrative, on assumed facts]. That view holds only while the exclusions work in practice. Registration with FIU-IND is a mandatory prerequisite for any person that provides those services to persons in India (para 2.1).

D.4.4Open point. S.O. 1072(E) and paragraph 1.1 of the FIU-IND guidelines still define a virtual digital asset by reference to section 2(47A) of the Income-tax Act, 1961, which the 2025 Act repealed. Whether that reference now reads as a reference to section 2(111) is not settled by the text. We need not resolve it: on the facts in C.1, the Token falls within clause (a) of section 2(111), which corresponds to clause (a) of the former section 2(47A).

D.4.5A Ministry of Finance release of 9 September 2026, on compliance action by FIU-IND, described crypto products and NFTs as unregulated (Press Information Bureau). Nothing in this leg implies that any Indian authority has reviewed the Token.

D.4.6Earlier sales. This letter does not address the Indian tax or PMLA consequences of the SAFT sales or of the delivery of Tokens at mainnet launch.

E.1Scale. This letter defines the words it uses to express confidence. “Is” and “will” state a conclusion we hold without reservation on the facts in Part C. “Should” states a conclusion we hold with a high degree of confidence, where a contrary view is arguable but, in our judgment, materially weaker.

E.2Conclusions. Subject to Parts A, C, F and G:

(a) United States. The Token itself should not be a security, being a digital commodity as the Release describes it [illustrative, on assumed facts]. Tokens delivered under the SAFTs are subject to an investment contract, which is a security, and will remain so until the Issuer has fulfilled the promises in C.1(6), shown for example by a public statement that it has completed those efforts, or purchasers otherwise cease reasonably to expect it to perform them [illustrative, on assumed facts].

(b) European Union. The Token should be a crypto-asset within Title II of MiCA, and not a financial instrument, an e-money token or an asset-referenced token [illustrative, on assumed facts]. The EU Admission requires a white paper, notified with an Article 8(4) explanation at least 20 working days before publication, drawn up by the Issuer or, if the operator of the trading platform agrees in writing, by that operator (Articles 5(1), 5(3) and 8(4)) [illustrative, on assumed facts].

(c) Emirate of Dubai. The Token should be a Category 2 Virtual Asset under the Issuance Rulebook, which may be placed in or from the Emirate only by a Licensed Distributor and which VARA does not approve [illustrative, on assumed facts].

(d) India. The Token is a virtual digital asset under section 2(111) of the Income-tax Act, 2025 [illustrative, on assumed facts], and income from a transfer of it is taxed as stated in D.4.2. On the facts in C.1(8), the Issuer’s arrangements should engage no person providing notified services to persons in India [illustrative, on assumed facts].

F.1This letter expresses our professional judgment on the questions in Part A. It is not a guarantee that any court, regulator or trading platform will reach the same conclusion.

F.2We express no view on (a) the tax treatment of the Token in any jurisdiction, except as stated for India in D.4.2; (b) the value of the Token, the price at which it may trade, or any projection or forecast in the whitepaper or elsewhere; (c) the design, security or performance of the Network’s code, beyond what the audit reports record; or (d) any law not named in A.1.

F.3Regulatory status. No regulator has approved the Token, the whitepaper or the Public Sale, and nothing in this letter states or implies otherwise. Under MiCA the competent authority does not approve a Title II white paper before publication (Article 8(3)). No Category 2 Virtual Asset is deemed approved by VARA, which makes no representation on the fitness, suitability or regulatory status of any issuer or Virtual Asset in any jurisdiction (Issuance Rulebook, Rule I.E.5), and the end of the Licensed Distributor’s submission period without comment is not an approval (Broker-Dealer Services Rulebook, Rule IV.D.7). The Release states the Commission’s interpretation for crypto assets generally and makes no finding about the Token.

F.4Our conclusions depend on the facts in Part C. If any of them is inaccurate, or changes, the conclusions may not hold.

G.1This letter is addressed to the Issuer and is given solely for its use in connection with the Public Sale and the EU Admission. No other person may rely on it, and it may not be used for any other purpose, without the prior written consent of the counsel who signs the relevant leg.

G.2[Licensed Distributor] and the operator of the trading platform for the EU Admission may rely on the leg relevant to them only if the counsel who signs that leg issues a reliance letter naming them, stating the purpose for which they may rely and identifying this letter by its date and reference.

G.3The Issuer may disclose this letter where required by law or by a regulator, and to its professional advisers, in each case on the basis that no recipient may rely on it.

H.1This letter speaks as at [date]. We have no obligation to update it for any change in the facts in Part C, or in the law, after that date, or to tell any person of such a change. A bring-down to a later date will be given only by a further letter that we agree in writing to give.

Yours faithfully,

Specimen: not signed and not to be signed.