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Simple Agreement for Future Tokens
I need a Simple Agreement for Future Tokens (SAFT) for an early-stage blockchain project, where investors will provide funding in exchange for the right to receive tokens once the network is operational. The agreement should include details on token allocation, vesting schedule, and compliance with Indian regulatory standards.
What is a Simple Agreement for Future Tokens?
A Simple Agreement for Future Tokens (SAFT) works like a promise note for cryptocurrency investments in India. It lets startups raise funds by offering investors the right to receive tokens once their blockchain platform launches. Think of it as a pre-booking arrangement for digital assets that don't exist yet.
Under Indian securities law, SAFTs help companies navigate regulatory compliance while building their token ecosystem. The agreement typically includes key details like token allocation, vesting schedules, and pricing terms. While not explicitly regulated by SEBI, these agreements fall under contract law and must align with India's evolving cryptocurrency guidelines.
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 your tokens aren't ready for distribution yet. This agreement works perfectly for Indian tech startups developing cryptocurrency platforms who want to secure investment while staying compliant with securities regulations.
The timing is crucial - implement SAFTs during your initial fundraising round, before your platform goes live. This helps protect both your company and investors by clearly documenting token rights, distribution terms, and compliance obligations. It's especially valuable when dealing with international investors, as it provides a structured framework recognized in major crypto markets.
What are the different types of Simple Agreement for Future Tokens?
- Basic SAFT: Designed for straightforward token sales with fixed pricing and distribution schedules
- Convertible SAFT: Includes provisions for converting the agreement into equity if the token launch doesn't materialize
- Milestone-based SAFT: Links token distribution to specific project achievements or development stages
- Multi-round SAFT: Structures token allocations across different investment phases with varying terms
- Hybrid SAFT: Combines token rights with traditional equity features, popular among Indian blockchain startups seeking diverse funding options
Who should typically use a Simple Agreement for Future Tokens?
- Blockchain Startups: Tech companies developing cryptocurrency platforms use Simple Agreement for Future Tokens to raise capital during early development stages
- Angel Investors: High-net-worth individuals who provide early funding in exchange for future token rights at preferential rates
- Venture Capital Firms: Investment companies specializing in crypto and blockchain ventures, often leading SAFT funding rounds
- Legal Counsel: Technology and securities lawyers who draft and review agreements to ensure compliance with Indian regulations
- Compliance Officers: Internal team members who monitor token distribution and ensure adherence to vesting schedules
How do you write a Simple Agreement for Future Tokens?
- Token Details: Document your planned token economics, including total supply, distribution schedule, and vesting periods
- Investment Terms: Define investment amounts, token price calculations, and any discounts for early investors
- Project Milestones: Outline key development stages and corresponding token distribution triggers
- Compliance Check: Review current Indian cryptocurrency regulations and SEBI guidelines for token offerings
- Investor Information: Gather KYC details, investment capacity proof, and accreditation status if applicable
- Platform Template: Use our platform's SAFT generator to ensure all critical elements are included and legally sound
What should be included in a Simple Agreement for Future Tokens?
- Token Rights: Clear description of future tokens, including quantity, price, and delivery conditions
- Investment Terms: Purchase amount, payment method, and token price calculation formula
- Distribution Rules: Vesting schedule, lock-up periods, and release mechanisms for tokens
- Project Milestones: Specific development targets that trigger token distribution
- Risk Disclosures: Detailed outline of investment risks and regulatory uncertainties
- Governing Law: Explicit statement of Indian jurisdiction and applicable regulations
- Termination Rights: Conditions for agreement cancellation and refund procedures
- KYC Requirements: Investor verification and compliance procedures
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 their underlying assets and regulatory framework. While both help startups raise capital, they operate under different Indian legal structures.
- Asset Type: SAFTs promise future cryptocurrency tokens, while SAFEs offer potential equity shares in the company
- Regulatory Framework: SAFTs fall under evolving crypto regulations, while SAFEs are governed by established Indian company law
- Investment Terms: SAFTs typically include token-specific elements like vesting schedules and distribution mechanisms; SAFEs focus on equity conversion triggers and valuation caps
- Risk Profile: SAFTs carry additional regulatory uncertainty due to India's developing crypto landscape, while SAFEs follow more predictable corporate governance rules
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