From Token to Shareholder: Molecule's Compliant Path from Community to Equity
Molecule's framework creates a documented, legally grounded pathway from token community participation to genuine equity ownership.
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11 min read
•Ella McCarthy-Page
The Missing Link
Asset tokenization has heralded a new era of digital representation for both real-world and digital assets. Biotech intellectual property was an intuitive early application of this technology; tokenization offered a natural solution to its traditionally illiquid nature.
In practice, this materialised through the creation of Intellectual Property Tokens (IPTs) by Molecule. However, for many token holders, it was unclear how these IPTs - structured as governance tokens - would translate into equity value. This uncertainty needed resolving before large-scale investment into DeSci projects could take hold. Our Coin-to-Company model addresses this tension through categorical separation of tokens and equity rather than temporal transformation or outright avoidance. The core proposition is that project tokens and equity securities serve different yet complementary purposes, and can work together seamlessly in the company formation, funding and administration process. In early March 2026, Molecule presented the model directly to the SEC Crypto Task Force and received a positive response. You can find the full legal whitepaper on our website. If you are interested in applying the model to your own project reach out to operations@molecule.xyz.
Building the Community Layer and the Company Layer
As it stands, a researcher is able to fundraise for their research via the sale of Intellectual Property tokens. Community members commit funds to the project and in return receive tokens. In parallel, there has always been the need for a real-world company to manage the assets, ensure the science progresses, and see that capital is accurately and legally deployed.
The tokens used in the community layer are open and permissionless. All token holders automatically become part of an association that is required for people to become shareholders in the company. Anyone can purchase the project's tokens, which also grant access to the utility that the project offers, with no formal relationship with the underlying company. In DeSci, this utility might include token-gated access to research data, AI agents, app features, pre-publication manuscript review, priority enrollment in clinical trials, or recognition in research acknowledgments. Token value derives from network utility, ecosystem adoption, and organic community growth, not from the operating company's commercial performance. This is the community layer, and it is designed to stay open.
The equity is used in the company layer. Locked token holders may apply to become shareholders in the company, whether as community members or traditional investors. Through the locked tokens, the company raises capital, employs the team, holds the intellectual property portfolio, and issues equity to investors and service providers through standard U.S. securities exemptions, with proper documentation, accredited investor requirements where applicable. Equity is unambiguously a security and is treated as one at every step. This operates exactly as a conventional startup would, except as a crypto-based company that uses blockchains and tokens for its corporate administration.
About the author
Ella McCarthy-Page
BSc(Hons) in Biochemistry and Materials Science. A communicator working at the intersection of biotechnology and web3.
So all shareholders are token holders - and in fact, the Coin-to-Company model requires this! The two relationships are always distinct, always separately documented, and always legally grounded in different frameworks. There is no mechanism that automatically converts tokens into equity, and no formula that links them. The connection is structural and intentional, not contractual.
What the Model Actually Delivers
Beyond resolving the regulatory tension, the Coin-to-Company model offers concrete benefits to each group it touches.
Real ownership with real upside
Equity issued through the Coin-to-Company model is structured to qualify for significant U.S. tax advantages. Shareholders who hold their equity long-term may be eligible to exclude a substantial portion of capital gains under established U.S. tax rules for qualifying small business stock. In plain terms: for investors who believe in the project and hold for the long run, the tax treatment can be meaningfully better than a standard investment.
Community without liability
One of the least-discussed risks in crypto is that informal groups of token holders can be treated by courts as general partnerships, exposing individual members to personal liability for the actions of the collective. The Coin-to-Company model addresses this directly: by organizing the token holder community as a properly structured nonprofit association, members gain genuine liability protection. You can participate in governance, contribute to the project, and hold tokens without putting your personal assets at risk.
Access to varied participants
Because the token track requires no accreditation or identity verification, the community can stay open to anyone. A researcher in Berlin, a patient advocate in São Paulo, and a developer in Seoul can all participate without friction. At the same time, institutional investors, who require compliance documentation, cap table clarity, and standard securities frameworks, can engage through the equity track without any of that being compromised. The model does not force a choice between community scale and institutional capital.
A replicable template
The Coin-to-Company model is a structured, documented framework that can be applied to new and existing DeSci projects. Each project that adopts it contributes to a growing body of precedent and shared infrastructure, making the next implementation faster and more robust than the last.
Crossing Over: How Token Holders Can Become Equity Holders
The bridge between the two tracks is voluntary and sequential. A token holder who wants to move from community participant to shareholder takes the following steps:
Lock tokens. The holder voluntarily locks their tokens in a smart contract. This signals commitment, provides a cryptographic identity that the company can then use for onchain corporate actions, and creates eligibility to apply for equity. Locking is reversible at any time before equity is received, and it creates no automatic right to anything.
Complete necessary legal verification. The locked token holder undergoes identity verification and, where required, accredited investor screening. This is the point at which the token holder becomes a known counterparty to the company.
Apply for equity. Verified locked token holders may apply for equity through one of the company’s approved pathways. The board reviews each application based on the applicant's contributions, expertise, and fit with current cap table needs. There is no formula, no conversion ratio, and no guaranteed outcome.
Receive equity and hold both. If approved, the holder receives equity through a separately executed investment or compensation agreement. They now hold two roles simultaneously: community member (via token ownership) and company shareholder (via equity). When they vote on company proposals using their locked tokens, their votes are binding, whereas non-shareholder locked token holders cast non-binding advisory votes.
Why This Model Is the Right Answer for This Moment
As is often the case, technology moves faster than regulation, leaving grey areas and unclear operational practices in its wake. The Coin-to-Company model did not emerge in a vacuum. The regulatory landscape it responds to has been broken for years, and the way most projects have coped has only made things worse.
Since the SEC's 2017 report on The DAO, crypto projects have faced a persistent legal puzzle: regulators apply decades-old securities law (most notably the 1946 Howey test) to blockchain technology it was never designed to address. Rather than enabling a straightforward path to compliance, this ambiguity pushed projects offshore, incentivized hasty decentralization, and forced founders to choose between raising capital legally and distributing tokens freely. The standard workaround; an offshore foundation for tokens, a U.S. company for equity, technically functions, but it pits token holders against the people actually building the product, creating structural conflict baked into the foundation of a project before it has even launched.
The Coin-to-Company model is the direct answer to that failure mode. Rather than routing around the law, it works within it, using the same regulatory frameworks that govern any U.S. startup, applied thoughtfully to a dual-track structure. The clear segregation between tokens and equity eliminates the grey zone that leaves participants exposed, and replaces structural conflict with structural alignment.
This is also a well-timed answer. The regulatory environment is shifting in the model's favor. The SEC's current leadership has signaled a move toward recognizing meaningful distinctions between digital commodities and securities.
Implementable Today
For all projects, the model offers something particularly valuable: a way to build the kind of open, participatory, community-driven ecosystem that makes the space compelling, while simultaneously creating the legal and financial infrastructure that allows serious capital to flow in and genuine ownership to flow out. The community and the cap table no longer have to be in tension. With the right structure, they reinforce each other. If you are interested in applying the model to your own project reach out to operations@molecule.xyz.
The Coin-to-Company model was developed by Benjamin Snipes, Chief Legal Officer of Molecule AG. The full academic paper is available on our website. This post is for informational purposes only and does not constitute legal or financial advice.
