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A Summary of

The SAFT Project

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The SAFT Project

  • Since 2013, developers have used token sales to raise start-up funding, putting network creators and investors under legal uncertainty
    • There was a need for a standard, compliant transactional framework to finance token networks, so companies came together to conduct research and analysis
  • SAFT: Simple Agreement for Future Tokens
  • Forum for discussion of compliant framework for token sales
    • Goal is to develop industry standards that protect interests of network creators, investors, and users
    • Creates responsible blockchain innovation
  • The SAFT is a framework which seeks to navigate the federal securities and money-transmitter laws, provide greater flexibility for tax management
    • Works for tokens which are not themselves independently securities 


  • Blockchain protocol “tokens” are digital assets used in connection with decentralized services
    • Purchasers in these presales tend to expect profit predominantly from sellers’ efforts to create functionality; therefore sellers are unintentionally selling securities and may be failing to comply with U.S. laws
  • Direct token presales have these common qualities:
    • Investment of money
    • Common enterprise
    • Expectation of profits
    • From the efforts of others
  • Already-functional utility tokens are unlikely to pass the Howey test because they rarely satisfy both the “expectation of profits” and “from the efforts of others” prongs
  • The SAFT transaction:
    • Step 1: Developers publish whitepaper, incorporate corporation, and secure commitments from investors
    • Step 2: Developers enter into a SAFT with the accredited investors. The investors transfer funds, the SAFT offers investors a discount on the final token sale and is a security, and forms are filed with the SEC
    • Step 3: The corporation uses the proceeds to develop the network into a product that provides genuine utility to its users
    • Step 4: The corporation launches the network and delivers the tokens to the investors. The investors begin sales of the token to the public
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