SAFT
SAFT is the acronym for "simple agreement for future tokens." It is a sometimes controversial funding technique that has been used in all sorts of blockchain projects. It mimics the older SAFE, or simple agreement for future equity.
Overview
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.[1] 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.[2]
References
- ↑ 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.
