As regulators take aim at cryptocurrency tokens, prominent crypto investors have taken unusual steps to insulate themselves: not seeking board seats at startups in hopes of avoiding liability.

Investors’ lawyers are warning that members of token-issuing startup boards could potentially face big regulatory penalties or get sued if other token holders band together in a class-action lawsuit. That’s prompted investors to take various steps to limit their liability, including forming advisory councils to advise founders or limiting their board participation to board observer status, which carries less liability.

Andreessen Horowitz, for one, has not sought out board seats at some token-issuing startups, partially due to the legal risks involved, a person familiar with the matter told The Information. The venture firm does not sit on the board of Uniswap Labs, for example, which raised a $11 million Series A led by Andreessen Horowitz in 2020.