Token Issuance Risk

Definition ∞ Token Issuance Risk refers to the various potential hazards associated with the creation and distribution of new digital tokens. These risks can include regulatory uncertainty regarding the token’s classification, technical vulnerabilities in the smart contract code, or market volatility affecting the token’s value. Additional concerns relate to the project’s operational viability, team experience, and potential for fraud or manipulation. Understanding these risks is crucial for both issuers and investors in the digital asset market.
Context ∞ Token issuance risk is a frequently discussed subject in cryptocurrency news, particularly concerning initial coin offerings, security token offerings, and new decentralized finance protocols. Regulators are increasingly scrutinizing token offerings, leading to discussions about investor protection and market integrity. The evolving regulatory landscape and the technical complexities of smart contracts mean that assessing and mitigating these risks remains a significant challenge for the industry.