SAFT is an acronym for a common contract for futures tokens. It refers to a type of investment contract that is recognized by cryptocurrency developers. And such deals are usually done for investors. Such agreements must be filed with the Securities and Exchange Commission. Because such contracts are generally considered a security instrument. Such agreements become effective only when certain development conditions are met. Such contracts then declare that there is an agreement between developers to exchange tokens for funds and capital from investors. Filing the agreement does not register the securities with the SEC.
A SAFT is a security instrument filed by the securities and exchange commission primarily for the final transfer of digital tokens from cryptocurrency developers to early investors. A general agreement for future tokens was created for one main purpose and that purpose is to help cryptocurrency ventures raise funds without violating regulations. Such contracts are compared to a simple contract for future equity (SAFE). These future equities then allow startup investors to convert their cash investment into equity at a point in the future if a certain condition is met.
Common contracts for this future were created to help new cryptocurrency ventures raise money. But at that time the fact that they do not violate the financial regulations has also been kept in consideration. Here such contracts were created as a means of treating an investment as a security. But at that time it was important that they did not violate any regulations. One thing that is very important here is that tokens are not issued at the time of contract signing. No token is executed even when the contract is signed. These tokens are issued only when the issuer achieves certain goals.
When a company sells a SAFT to an investor, it receives funds from that investor. But at that time the company does not transfer a coin or token to the investor. But the investor gets the documentation from the company. Then they realize that they will be given tokens if the project is successful.
But they have to be filed by the Securities and Exchange Commission. An important point here, however, is that since cryptocurrency developers are not well-versed in securities law, they may not have access to financial and legal advice. But because such inexperienced developers lack access to financial and legal advice, it can be easy for them to run afoul of regulations. Development of SAFT creates a simple, inexpensive framework. And thus can use this new contract to raise funds while remaining legally compliant. Read this article for more details about this.
