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What is a Simple Agreement for Future Tokens?

A Simple Agreement for Future Tokens (SAFT) lets companies raise funds by promising investors future cryptocurrency tokens once their blockchain platform launches. Under German financial regulations, these agreements help startups secure early-stage funding while staying compliant with BaFin's cryptocurrency guidelines and securities laws.

SAFTs work like convertible notes but for digital assets - investors provide capital now in exchange for tokens later. This structure helps German blockchain projects navigate the complex regulatory landscape around token sales, particularly since BaFin classifies most crypto-assets as financial instruments requiring proper documentation and disclosures.

When should you use a Simple Agreement for Future Tokens?

Use a Simple Agreement for Future Tokens when your blockchain startup needs to raise capital before launching its platform or tokens. This agreement works particularly well for German tech companies developing decentralized applications who need early funding but can't immediately issue tokens due to BaFin's regulatory requirements.

The timing is crucial - implement SAFTs during your pre-launch fundraising phase, when you have a clear technical roadmap but haven't yet developed the actual tokens. This approach helps comply with German securities laws while giving investors a legally binding promise of future tokens in exchange for their current investment.

What are the different types of Simple Agreement for Future Tokens?

  • Standard SAFT: Basic version focusing on token delivery terms and investment conditions, commonly used by German blockchain startups
  • Qualified SAFT: Enhanced version with detailed investor accreditation requirements and BaFin compliance provisions
  • Hybrid SAFT: Combines token rights with traditional equity elements, popular among German fintech companies
  • Project-Specific SAFT: Customized agreement incorporating specific technical milestones and development timelines
  • Institutional SAFT: Structured for large-scale investments with additional regulatory safeguards and reporting requirements

Who should typically use a Simple Agreement for Future Tokens?

  • Blockchain Startups: Issue SAFTs to secure early-stage funding while developing their token-based platforms
  • Accredited Investors: Provide capital in exchange for future token rights, often including venture capital firms and high-net-worth individuals
  • Legal Counsel: Draft and review agreements to ensure compliance with BaFin regulations and German securities laws
  • Technical Developers: Define token specifications and development milestones within the agreement
  • Compliance Officers: Monitor adherence to regulatory requirements and investor qualification standards

How do you write a Simple Agreement for Future Tokens?

  • Project Details: Document your token's technical specifications, use case, and development timeline
  • Investment Terms: Define token price, delivery conditions, and conversion mechanisms
  • Investor Information: Collect accreditation proof and KYC documentation per BaFin requirements
  • Risk Disclosures: Prepare detailed statements about project risks and regulatory uncertainties
  • Technical Milestones: Outline specific development stages triggering token distribution
  • Compliance Review: Our platform ensures your SAFT includes all mandatory elements under German law

What should be included in a Simple Agreement for Future Tokens?

  • Token Specifications: Detailed description of future tokens, including technical features and utility
  • Investment Terms: Purchase price, token allocation formula, and delivery conditions
  • Regulatory Compliance: BaFin-required disclosures and investor qualification criteria
  • Distribution Triggers: Clear milestones or events that initiate token distribution
  • Risk Disclosures: Comprehensive listing of project and regulatory risks
  • Governing Law: Explicit reference to German jurisdiction and applicable regulations
  • Termination Rights: Conditions for agreement cancellation and refund mechanisms

What's the difference between a Simple Agreement for Future Tokens and a Simple Agreement for Future Equity?

Simple Agreement for Future Tokens (SAFT) differs significantly from a Simple Agreement for Future Equity (SAFE), though both are funding instruments for early-stage companies. While they share similar structures, their underlying assets and regulatory frameworks in Germany create important distinctions.

  • Asset Type: SAFTs promise future cryptocurrency tokens, while SAFEs convert to company equity shares
  • Regulatory Framework: SAFTs must comply with BaFin's cryptocurrency regulations and token-specific rules; SAFEs follow traditional German corporate law
  • Investment Timeline: SAFTs typically convert upon specific technical milestones; SAFEs convert during equity financing rounds
  • Risk Profile: SAFTs carry additional regulatory and technical risks related to token development; SAFEs focus on standard business execution risks
  • Investor Rights: SAFTs provide token-holder rights; SAFEs offer potential shareholder rights and protections

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