SAFT is the acronym for simple agreement for future tokens. It is a controversial funding technique that has been used in all sorts of blockchain projects. It mimics the older SAFE, or simple agreement for future equity.
A SAFT is an investment contract in which the investor is promised tokens that are to be used in an as yet unbuilt or still non-functioning service or technology. For blockchain start-ups that are planning to issue tokens, the SAFT structure allows them to take in cash against the promise of later issuing tokens. Tokens do not dilute the entity's equity. The SAFT is generally viewed to be a security and consequently issuers are usually advised to conform issuance and sale in the U.S. with U.S. securities law, in particular the conditions around distribution.
- Updating SAFT: Breaking the Security/Utility Token Conundrum Under U.S. law. Murphy & McGonigle.
- Startups Love This Cryptocurrency Strategy. Regulators Say Not So Fast. Wall Street Journal.