How to Check a Crypto Project: Nine Checks Before You Buy an Unknown Coin

An unknown token can be put through its paces in about half an hour, and doing so requires neither programming skills nor a subscription. The core of the exercise comes down to three questions: who stands behind the project, who owns the tokens, and how much of that can be looked up independently? This guide works through nine checkpoints in order, from the European register to how holdings are spread across a handful of addresses. What it produces at the end is not a verdict on individual projects but a procedure you can apply again to every token that follows. Why Due Diligence on Crypto Assets Works Differently Than on Equities With a share, the capital market supplies the homework: audited annual accounts, notification thresholds, ad hoc disclosure duties, plus a supervised trading venue. With a freely traded token, that substructure is largely absent. The figures usually come from the project itself, and the cross-check is yours to organise. That does not mean there is nothing to check. On the contrary: a public blockchain exposes things that would never be visible at a company. How many tokens exist, where they sit and when they last moved can be looked up by anyone. The skill lies in looking in the right places. One point up front that puts the whole exercise in perspective: even a project that passes every checkpoint can end up worthless. These checks weed out the obvious cases and make the rest comparable. A total loss remains possible with any crypto asset, including the largest ones. Checkpoint 1: Is the Provider Listed in the European Register? The first look is not at the token but at the place where you intend to buy it. Since 30 December 2024, a company that holds, exchanges or brokers crypto assets for clients has needed authorisation under the European regulation on markets in crypto-assets. The European securities regulator ESMA maintains a central register under MiCAR for this, listing authorised service providers alongside whitepapers and companies that have drawn attention. For issuers themselves, the rules differ by token type. For asset-referenced tokens the regulation requires authorisation from BaFin under Article 16(1)(a) MiCAR; for e-money tokens the procedure runs via a notification. Both categories can be viewed in ESMA’s interim register. What the duties for companies cover in detail we have compiled in our overview of the MiCA licensing obligations. The opposite direction is just as revealing: supervisory authorities keep warning lists of providers operating without authorisation. How extensive that list has become and where the entries come from is set out in our article on the EU warning list for crypto providers. A hit there ends the review immediately. Checkpoint 2: Is There a Whitepaper, and Does It Contain Anything Verifiable?