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Simple Agreement for Future Tokens
I need a Simple Agreement for Future Tokens (SAFT) to secure investment for a blockchain startup, outlining the terms for future token issuance once the network is operational. The agreement should include details on the token allocation, vesting schedule, and compliance with Hong Kong's regulatory framework for digital assets.
What is a Simple Agreement for Future Tokens?
A Simple Agreement for Future Tokens (SAFT) helps Hong Kong startups raise funds for blockchain projects by promising investors future digital tokens once their platform launches. It works like a forward contract, giving early backers rights to tokens that don't exist yet, while following local securities regulations and SFC guidance.
SAFTs protect both sides during token development: investors get contractual rights to future tokens at preferential rates, while projects secure immediate funding without complex share structures. The agreement typically includes key details like token allocation, vesting periods, and conditions for distribution, aligned with Hong Kong's regulatory framework for virtual assets.
When should you use a Simple Agreement for Future Tokens?
Use a Simple Agreement for Future Tokens when launching a blockchain project in Hong Kong that needs early-stage funding but can't issue tokens immediately. This agreement works perfectly for startups developing new platforms or protocols who need capital during the development phase before their tokens are ready for distribution.
The SAFT becomes especially valuable when dealing with sophisticated investors who understand blockchain technology and want early access to future tokens. It's particularly useful when your project requires significant development time, and you need to structure the investment in compliance with Hong Kong's securities laws while maintaining flexibility in token design and distribution.
What are the different types of Simple Agreement for Future Tokens?
- Standard SAFT: Basic agreement focusing on token purchase rights, delivery timeline, and investor eligibility under Hong Kong regulations
- Milestone-Based SAFT: Links token distribution to specific project achievements or development stages
- Multi-Round SAFT: Allows for phased investment with different token pricing tiers
- Jurisdiction-Specific SAFT: Tailored to comply with both Hong Kong securities laws and international token offering requirements
- Hybrid SAFT: Combines token rights with traditional equity or debt elements for added investor protection
Who should typically use a Simple Agreement for Future Tokens?
- Blockchain Startups: Issue SAFTs to secure funding during early development stages of their token-based platforms
- Professional Investors: Purchase rights to future tokens at preferential rates while accepting development risks
- Legal Counsel: Draft and review agreements to ensure compliance with Hong Kong's securities regulations
- Corporate Advisors: Structure token offerings and validate investor qualifications under SFC guidelines
- Project Developers: Execute technical milestones tied to token distribution schedules
- Compliance Officers: Monitor adherence to anti-money laundering and securities regulations throughout the SAFT lifecycle
How do you write a Simple Agreement for Future Tokens?
- Project Details: Document your token's technical specifications, utility, and development timeline
- Investor Information: Gather proof of professional investor status under Hong Kong regulations
- Token Economics: Define token pricing, allocation formulas, and vesting schedules
- Compliance Check: Review SFC guidelines on virtual assets and securities offerings
- Risk Disclosures: List project risks, token delivery conditions, and potential failure scenarios
- Distribution Terms: Specify token delivery mechanics and technical requirements
- Platform Support: Use our template generator to ensure all mandatory elements are included correctly
What should be included in a Simple Agreement for Future Tokens?
- Parties & Eligibility: Clear identification of issuer and investor, confirming professional investor status
- Token Details: Specifications of future tokens, including rights, functions, and technical features
- Purchase Terms: Investment amount, token price, and calculation method for token allocation
- Delivery Conditions: Token distribution timeline, vesting schedule, and technical requirements
- Risk Disclosures: Project risks, regulatory uncertainties, and potential failure scenarios
- Termination Rights: Conditions for agreement cancellation and refund mechanisms
- Governing Law: Explicit reference to Hong Kong law and SFC regulations
- Signature Block: Execution details and signing authority verification
What's the difference between a Simple Agreement for Future Tokens and a Simple Agreement for Future Equity?
Simple Agreement for Future Tokens (SAFT) and Simple Agreement for Future Equity (SAFE) serve similar fundraising purposes but differ significantly in what they promise investors. While both help early-stage companies raise capital, they operate under different regulatory frameworks in Hong Kong.
- Investment Target: SAFTs promise future cryptocurrency tokens, while SAFEs offer future equity shares
- Regulatory Framework: SAFTs fall under virtual asset regulations and SFC guidelines, while SAFEs follow traditional securities laws
- Conversion Trigger: SAFTs convert upon token launch or platform completion; SAFEs convert during equity financing rounds
- Investor Rights: SAFT holders receive tokens with utility features, while SAFE holders get company ownership rights
- Risk Profile: SAFTs carry additional technology and regulatory risks specific to cryptocurrency projects, whereas SAFEs face standard startup risks
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