The world of cryptocurrency needs a fiduciary standard

In traditional finance, fiduciary duty isn’t just an expectation — it’s a fundamental legal requirement. Executives and board members are obligated to act in the best interests of their shareholders. In this sense, fiduciary duties promote transparency and accountability between companies and their external stakeholders. 

Yet in the world of cryptocurrency, where billions of dollars flow freely into token projects, no comparable fiduciary standard exists. This glaring omission has enabled a culture of unchecked founder behavior, where capital is raised with vague promises and minimal oversight. The result is a pattern of failed token launches from projects that either treat their communities as little exit liquidity or neglect critical aspects of launch strategy. Regardless of intention, the common end result is suboptimal token performance, and no recourse for tokenholders when roadmaps vanish, liquidity dries up, and incentives collapse.

If crypto is serious about evolving into a credible, investable asset class, it must embrace the core principle that has underpinned financial markets for centuries: accountability to those who provide capital. That begins with adopting fiduciary standards.

Establishing fiduciary accountability through voluntary self-regulation

Given the slow pace and complexity of formal regulatory processes, the crypto industry must proactively establish standards to restore credibility and safeguard investors. One powerful approach is adopting voluntary, industry-driven fiduciary standards through third-party rating organizations — similar to how Moody’s or Standard & Poor’s operate in traditional finance.

A ratings agency could enforce discipline in tokenomics by requiring projects to submit standardized documentation outlining core tenets such as distribution, emissions, utilities, and demand mechanisms. These submissions would be evaluated against industry benchmarks and scored for clarity, transparency, and alignment with long-term holder incentives. Periodic updates could be required post-launch to ensure models remain accurate and are executed as proposed.

To assess vesting discipline, a ratings body could evaluate the structure and timeline of token unlocks, awarding higher scores to projects with conservative releases, insider lockups, and milestone-based vesting. Agencies could also publish public unlock calendars to allow investors to assess supply overhang risk. Opaque or front-loaded vesting would receive lower scores, encouraging best practices via reputational incentives.

Independent evaluators could require disclosure of a project’s liquidity strategy prior to launch, including exchange listings, market maker arrangements, and projected slippage under various trading scenarios. Valuations at token generation events would be published, and disclosures on the structure of a pre-market order book created by market makers and exchanges could be mandated. This would allow prospective investors and traders to assess how much liquidity is available at the immediate onset of trading. Predatory or opaque liquidity practices would be penalized, therefore discouraging manipulative practices from bad actors. 

To establish longer-term accountability, ratings agencies could maintain a shared founder trust score based on historical conduct. This might include on-chain activity, delivery on past roadmaps, or involvement in failed or exploitative ventures. Projects would be scored on whether they meet stated milestones and remain transparent with updates. This score would function like a credit score, creating persistent reputational incentives.

While these ratings wouldn’t carry legal weight, they would provide meaningful market signals. Exchanges, investors, and communities would increasingly rely on them to distinguish trustworthy builders from opportunists. Over time, transparent, well-managed projects would command more capital, while opaque ones would be left behind.

The current vacuum of accountability

In the current crypto landscape, it’s common for projects to launch with little more than a flashy website, a charismatic founder, and a whitepaper filled with web3 buzzwords and meaningless jargon. Despite lacking clear roadmaps or credible execution strategies, these projects frequently raise tens of millions of dollars. Fueled by speculative interest and widespread misunderstanding of token fundamentals, the bar for quality remains dangerously low.

Without fiduciary duties, founders face little pressure to allocate capital responsibly or deliver long-term value. Instead, many optimize for short-term hype: targeting influencers, generating price spikes, and selling into early momentum via over-the-counter deals. Once initial enthusiasm wanes, these projects often nosedive — with no mechanisms in place to stabilize value or protect tokenholders.

The consequences go beyond poor individual outcomes. According to research from CoinGecko, 95% of tokens launched during the 2021 bull market have dropped more than 90% from their all-time highs. This trend has continued into 2025, with over 1.8M tokens collapsing in the first quarter of the year alone. It’s not that these tokens are all “failing” — it’s that they were never designed to survive. These projects are not designed to accrue value; they simply use tokenholders as exit liquidity. The proliferation of these shoddy projects has created an unending cycle of token collapses — each one corroding trust in the crypto ecosystem, siphoning capital away from legitimate projects, and deterring investment in the sector.

Even among well-intentioned teams, misaligned launch strategies are common and contribute to systemic issues. Many projects grant significant early allocations to venture investors, who absorb most of the primary market demand. When tokens reach public exchanges, institutional appetite has already been satisfied — leaving limited support for secondary markets. Retail buyers are often left holding illiquid assets that become hyperinflationary as emissions slowly unlock large quantities of tokens into circulation. Without clear, rigorous standards, even promising teams struggle to execute successful launches — there are no established best practices to guide them, and investors (especially retail) lack reliable metrics to distinguish sustainable projects from those destined to fail.

Crypto’s credibility crisis is reaching a breaking point

Regulatory bodies across the globe and their policies — from the Markets in Crypto-Assets Regulation in Europe to the GENIUS Act in the U.S. — are watching crypto closely, and if the industry continues to let misconduct and misaligned incentives fester, we shouldn’t be surprised when the response is heavy-handed. Without proactive self-regulation, governments will be forced to step in with sweeping rules that may prioritize investor protection at the expense of innovation. The crypto industry has a narrow window to act — to show it can govern itself responsibly before regulators are compelled to do it for us.

At the same time, institutions — arguably the next major driver of crypto’s evolution — are very closely eyeing the space, and are wary of entering a market perceived as ungoverned and volatile. A credible fiduciary framework could serve as the bridge to unlock broader capital inflows.

Crypto has long prided itself on decentralization and innovation. But decentralization cannot mean lawlessness, and innovation without accountability is a dead end. By voluntarily embracing fiduciary responsibilities, crypto founders and stakeholders can help this industry graduate from a high-risk experiment to a respected, enduring asset class.

If we don’t, we shouldn’t be surprised when investors stop taking us seriously.