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A Simple Agreement for Future Tokens (SAFT) is a legal investment contract used in blockchain and cryptocurrency projects, where investors provide funding in exchange for the right to receive tokens once the project's network becomes operational. In New Zealand's regulatory framework, SAFTs are typically structured as debt instruments or convertible notes, falling under the Financial Markets Conduct Act 2013 and subject to oversight by the Financial Markets Authority (FMA).

The SAFT framework helps cryptocurrency projects raise capital while navigating compliance requirements, including anti-money laundering regulations under the AML/CFT Act. For projects seeking investment, SAFTs offer a structured approach to token distribution that aligns with securities laws, requiring detailed disclosure documents and often limiting participation to wholesale or eligible investors. This mechanism has become increasingly important as regulatory scrutiny of digital asset offerings intensifies, providing a legally sound pathway for blockchain ventures to secure early-stage funding while maintaining regulatory compliance.

Consider implementing a Simple Agreement for Future Tokens when your blockchain venture needs to secure early-stage funding while maintaining compliance with New Zealand's securities regulations. This instrument proves particularly valuable if you're developing a token-based platform that isn't yet operational but requires capital investment to reach launch stage, especially when targeting wholesale investors under the Financial Markets Conduct Act 2013.

You should opt for a SAFT when facing scenarios that demand clear legal separation between initial fundraising and token distribution phases, or when seeking to mitigate regulatory risks associated with direct token sales. This approach becomes especially beneficial if your project needs flexibility in token distribution timing, requires structured investor rights documentation, or must demonstrate compliance with AML/CFT requirements to financial authorities. The SAFT framework offers significant advantages for projects aiming to establish credibility with institutional investors while maintaining the ability to adjust token economics before network launch, providing a balanced solution between fundraising needs and regulatory obligations.

Within New Zealand's regulatory framework, Simple Agreement for Future Tokens exhibit several key variations, each designed to address specific project requirements and investor relationships while maintaining compliance with the Financial Markets Conduct Act. The primary differences typically emerge in token distribution mechanisms, vesting schedules, and investor rights provisions, allowing projects to tailor their agreements to specific fundraising needs and regulatory obligations.

• Standard SAFT: Features straightforward token delivery terms with fixed conversion rates, suitable for projects with clear token economics and launch timelines.
• Tiered SAFT: Incorporates multiple investment levels with varying token allocation rates and bonus structures, often used for larger fundraising rounds.
• Milestone-based SAFT: Links token distribution to specific project achievements or development stages, providing additional investor protection.
• Hybrid SAFT: Combines elements of traditional equity instruments with token rights, particularly useful for projects seeking institutional investment.

Selecting the appropriate SAFT structure depends on factors such as project maturity, investor sophistication, and regulatory compliance requirements. Each variation offers distinct advantages in terms of flexibility, investor protection, and operational efficiency, making it crucial to align the chosen format with your project's specific objectives and risk management strategy while ensuring compliance with AML/CFT obligations.

The Simple Agreement for Future Tokens involves multiple stakeholders within New Zealand's blockchain and cryptocurrency ecosystem, each playing distinct roles in the document's creation, execution, and compliance framework. Understanding these key parties is crucial for effective implementation and regulatory adherence.

• Token Issuer/Project Developer: The blockchain venture or company developing the token-based platform, responsible for drafting the SAFT terms, ensuring compliance with the Financial Markets Conduct Act, and ultimately delivering the promised tokens.
• Wholesale Investors: Typically experienced investors or entities meeting eligibility criteria under New Zealand securities laws, who provide funding in exchange for future token rights.
• Legal Counsel: Specialized attorneys who structure the SAFT to comply with FMA requirements, draft terms, and ensure alignment with AML/CFT obligations.
• Compliance Officers: Internal or external professionals responsible for ongoing monitoring of regulatory compliance and investor verification processes.
• Financial Markets Authority Representatives: Regulatory oversight officials who may review SAFT arrangements for compliance with securities laws and investor protection requirements.

Successful implementation of a SAFT requires careful coordination among these parties, with each stakeholder understanding their obligations and rights under New Zealand's regulatory framework. Clear communication channels and documented roles help maintain compliance while facilitating smooth token distribution processes.

Creating an effective Simple Agreement for Future Tokens requires careful attention to both legal compliance and practical functionality within New Zealand's regulatory framework. Utilizing a custom-generated template from a reputable provider like ��������Ƶ can significantly simplify the process and minimize the chance of mistakes, ensuring accuracy and compliance with legal requirements.

• Initial Structure Setup: Begin with clear definitions of token characteristics, project milestones, and conversion mechanisms that align with the Financial Markets Conduct Act requirements.
• Investor Eligibility Criteria: Explicitly detail wholesale investor qualifications and verification processes as mandated by New Zealand securities laws.
• Token Distribution Terms: Specify precise conditions for token delivery, including timing, quantity calculations, and any applicable vesting schedules.
• Regulatory Compliance Provisions: Include comprehensive AML/CFT compliance mechanisms and FMA reporting requirements.
• Risk Disclosure Section: Draft detailed risk acknowledgments covering project failure, regulatory changes, and market volatility.
• Dispute Resolution Framework: Incorporate clear jurisdiction clauses and dispute resolution procedures aligned with New Zealand law.

Before finalizing the SAFT, ensure thorough legal review by counsel experienced in digital asset regulations. Regular updates may be necessary to maintain alignment with evolving cryptocurrency regulations and market standards.

A comprehensive Simple Agreement for Future Tokens must incorporate specific elements to ensure legal validity under New Zealand's securities and financial markets regulations. ��������Ƶ takes the guesswork out of this process by providing legally sound, custom-generated legal documents, ensuring all mandatory elements are correctly included and minimizing drafting errors. The following checklist outlines essential components required for SAFT compliance:

• Parties and Definitions: Clear identification of token issuer, investors, and precise definitions of tokens, network, and conversion terms aligned with Financial Markets Conduct Act requirements.
• Investment Terms: Detailed specification of purchase amount, token price, conversion mechanics, and distribution timeline.
• Token Rights and Restrictions: Explicit description of token utility, transfer restrictions, and any applicable vesting schedules.
• Investor Qualifications: Comprehensive wholesale investor criteria and verification requirements under New Zealand securities laws.
• Project Milestones: Specific development targets, launch conditions, and associated token distribution triggers.
• AML/CFT Compliance: Detailed anti-money laundering procedures and ongoing compliance obligations.
• Risk Disclosures: Comprehensive risk factors including regulatory, technical, and market risks specific to token offerings.
• Representations and Warranties: Issuer and investor declarations regarding capacity, authority, and compliance with applicable laws.
• Token Distribution Mechanics: Precise calculations for token allocation, including any bonus structures or early-investor benefits.
• Termination Provisions: Clear conditions for agreement termination and associated refund mechanisms.
• Governing Law: Explicit designation of New Zealand law as governing jurisdiction.
• Dispute Resolution: Detailed procedures for handling disputes, including mediation and arbitration protocols.

Regular review and updating of these elements ensures continued compliance with evolving regulatory requirements and market standards, maintaining the SAFT's effectiveness and enforceability within New Zealand's legal framework.

A Simple Agreement for Future Tokens (SAFT) is frequently compared to a Simple Agreement for Future Equity (SAFE), as both are investment instruments designed for early-stage funding. However, these documents serve distinctly different purposes within New Zealand's regulatory framework and require careful consideration to choose the appropriate option for your specific needs.

• Investment Structure: While SAFTs promise future cryptocurrency tokens, SAFEs offer rights to future equity shares in the company, falling under traditional company law provisions.
• Regulatory Framework: SAFTs operate primarily within cryptocurrency regulations and the Financial Markets Conduct Act's digital asset provisions, whereas SAFEs are governed by conventional securities laws and Companies Act requirements.
• Conversion Mechanism: SAFTs convert to utility tokens upon network launch, while SAFEs convert to equity during qualifying funding rounds or exit events.
• Investor Rights: SAFE holders typically gain shareholder rights upon conversion, whereas SAFT holders receive utility tokens without corporate governance rights.
• Risk Profile: SAFTs carry unique regulatory and technical risks associated with cryptocurrency projects, while SAFEs face traditional startup investment risks.
• Compliance Requirements: SAFTs must address specific AML/CFT obligations and digital asset regulations, whereas SAFEs focus on traditional corporate compliance matters.

Understanding these distinctions is crucial for selecting the appropriate instrument based on your project's nature, whether it's a blockchain-based venture requiring a SAFT or a traditional startup better suited to SAFE financing under New Zealand's legal framework.