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Simple Agreement for Future Tokens
"I need a simple agreement for future tokens to secure GBP 10,000 investment in a blockchain startup, with tokens issued upon network launch. The agreement should include a 12-month vesting period, a 20% discount rate, and comply with UK regulations."
What is a Simple Agreement for Future Tokens?
A Simple Agreement for Future Tokens (SAFT) lets investors fund blockchain projects now in exchange for tokens later, once the network launches. It's similar to traditional equity agreements but specifically designed for crypto ventures, helping companies raise capital while navigating UK financial regulations.
Under English law, SAFTs work like forward contracts, where investors provide funding today based on the promise of future tokens. This structure helps blockchain startups comply with securities laws during their development phase, while giving investors a legal framework to participate in token sales before the actual cryptocurrency or utility token exists.
When should you use a Simple Agreement for Future Tokens?
Use a Simple Agreement for Future Tokens when launching a blockchain project that needs early-stage funding but doesn't have a functional token system yet. It's particularly valuable for UK tech startups developing decentralized platforms who want to secure investment while their technology is still under development.
The SAFT structure works best when your project needs substantial development time before token launch, and you're dealing with sophisticated investors who understand blockchain technology. It helps avoid regulatory issues around selling tokens directly to the public, while giving your investors clear legal rights under English contract law.
What are the different types of Simple Agreement for Future Tokens?
- Basic SAFT: The standard version typically used for early-stage blockchain projects, focusing on token delivery terms and investment amounts
- Hybrid SAFT: Combines token rights with equity-like features, offering investors additional protections under UK company law
- Staged SAFT: Structures token distribution across multiple development milestones, reducing investor risk
- Regulatory-focused SAFT: Enhanced compliance provisions for projects falling under FCA oversight
- Industry-specific SAFT: Tailored versions for DeFi, GameFi, or enterprise blockchain applications with sector-specific terms
Who should typically use a Simple Agreement for Future Tokens?
- Blockchain Startups: Technology companies developing decentralized platforms who need funding before their token system is operational
- Professional Investors: Venture capital firms, angel investors, and investment funds familiar with crypto assets and blockchain technology
- Legal Counsel: Specialist cryptocurrency lawyers who draft and review SAFTs to ensure FCA compliance
- Project Developers: Technical teams responsible for meeting development milestones tied to token distribution
- Compliance Officers: Internal teams ensuring ongoing adherence to UK securities laws and FCA regulations
How do you write a Simple Agreement for Future Tokens?
- Project Details: Document your token's technical specifications, utility, and development timeline
- Investment Terms: Define the investment amount, token price calculation method, and distribution schedule
- Company Information: Gather corporate documents, shareholder details, and regulatory registrations
- Risk Disclosures: List potential project risks, regulatory uncertainties, and market factors
- Development Milestones: Outline specific technical achievements tied to token distribution
- Compliance Check: Our platform ensures your SAFT meets FCA requirements and UK securities laws
What should be included in a Simple Agreement for Future Tokens?
- Party Details: Full legal names, addresses, and company registration numbers of issuer and investor
- Investment Terms: Purchase amount, token price calculation, and distribution mechanics
- Token Rights: Clear description of future token features, utility, and transfer restrictions
- Conditions Precedent: Network launch requirements and development milestones
- Risk Disclosures: Project risks, regulatory uncertainties, and investor acknowledgments
- Legal Framework: Governing law (England & Wales), jurisdiction, and dispute resolution mechanisms
- Termination Rights: Project failure provisions and investor protection clauses
What's the difference between a Simple Agreement for Future Tokens and a Simple Agreement for Future Equity?
A Simple Agreement for Future Tokens (SAFT) differs significantly from a Simple Agreement for Future Equity (SAFE), though both are investment instruments. While they share similar structures, their underlying assets and regulatory frameworks are quite different under English law.
- Asset Type: SAFTs promise future cryptocurrency tokens, while SAFEs convert to company shares
- Regulatory Framework: SAFTs must navigate both cryptocurrency and securities regulations, while SAFEs primarily deal with traditional company law
- Trigger Events: SAFTs convert upon network launch and token creation, whereas SAFEs typically convert during equity funding rounds
- Risk Profile: SAFTs carry additional technical and regulatory risks related to blockchain development, while SAFEs focus on standard business execution risks
- Investment Terms: SAFTs include token-specific mechanics like distribution schedules and network milestones, while SAFEs focus on valuation caps and discount rates
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