Simple Agreement For Future Tokens

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 1,822 reviews

Jump to Section

Need help with a legal contract?

Post Project Now

What is a Simple Agreement for Future Tokens (SAFT)?

A simple agreement for future tokens, or SAFT, is an investment contract offered to accredited investors by cryptocurrency developers. These legal documents are an alternative to future equity and allow cryptocurrency companies to fundraise without state, federal, or international violations. The US government classifies cryptocurrency tokens as a type of security, requiring the parties to follow all applicable rules and regulations.

A SAFT is a security since accredited investors offer financing without expecting a future, guaranteed return. When an investor invests in a project, they expect the project’s tokens to sell for a higher price, which allows the investor to profit. The SAFT is used to complete the investment, which satisfies the fundamental requirements and is subject to federal securities regulations.

This website will show you a SAFT sample via the US Securities and Exchange Commission’s (SECs).

What is a Token Purchase?

A token purchase is an investment transaction, typically activated by an initial coin offering (ICO), the cryptocurrency’s version of an initial public offering, or IPO. Token purchases are a vehicle for cryptocurrency companies to raise many through accredited investors. These transactions are governed through contracts, such as a token purchase agreement or a private token sale agreement.

Meet some lawyers on our platform

Michael K.

39 projects on CC
View Profile

Bryan B.

55 projects on CC
View Profile

Gregory B.

34 projects on CC
View Profile

Nicholas V.

4 projects on CC
View Profile

How SAFT Agreements Work

SAFT agreements compensate accredited investors for early financing. The cryptocurrency company will issue tokens at a discount or liquidation scenario’s value, similar to convertible notes. The discount price is a single token’s value multiplied by the discount rate during a triggering event.

A SAFT essentially allows the company to defer the valuation of the token. Certain SAFT agreements may have a valuation cap. Thus, when parties raise capital through a SAFT with a valuation cap, they essentially negotiate a valuation.

SAFTs do not need to fall under the balance sheet as a debt. However, suppose the company fails before the cash converts to tokens. In that case, it typically offers to pay the investor an amount equal to the capital investment before paying its shareholders.

What’s Included in a Simple Agreement for Future Tokens (SAFT)?

Negotiating three terms before signing a SAFT is critical, including triggering events, valuation caps, discounts, and pro-rata rights. SAFTs are not all created equal, which means that the terms can make your investment sink or swim. An experienced startup lawyer can assist you in negotiating and drafting these terms.

Here is what you should know about each one and how they affect the investment:

  • Trigger Events. Upon triggering an event such as a company sale, initial coin offering (ICO), or merger, future tokens convert to tokens. If the company goes bankrupt or the triggering events never occur, the SAFT is worthless. A future token investment can serve as the trigger. The SAFT investor receives the same number of tokens as prospective investors.
  • Valuation Caps. A seed-stage investor takes a significant risk in the early stages. For the investor, a valuation cap resolves this issue. A valuation cap establishes a maximum token value to determine the investor’s ownership percentage. Without a cap on the token’s valuation, the percentage available to the SAFT investor continues to decline as the company’s value increases.
  • Discounts. A discount rate provides a deal to the SAFT investor on the value of the tokens at the time of the triggering event. It is a discount from the anticipated price in the future. For example, a discount rate of 80 percent means that the SAFT investor receives their future tokens for 80 percent of the price paid by future investors as an early investment reward.
  • Pro-Rata Rights. Pro-rata rights allow the SAFT investor to participate in future fundraising rounds. While this benefits the accredited investor, the company could face issues with future investors if they want the round to themselves. This issue could be exacerbated if the company has granted pro-rata rights to multiple SAFT investors.


A simple agreement for future equity (SAFE), or SAFE agreement, is different from a SAFT. Instead of future tokens, this investment contract entitles investors to future equity upon triggering a qualifying event, such as a merger, acquisition, or financing round. SAFE notes were invented by Y-Combinator, a San Francisco-based startup incubator, and are viewed as a more founder-friendly alternative to convertible notes.


SAFTs often work in conjunction with initial coin offerings (ICOs). An ICO involves a project selling its tokens to regular, pre-approved users during the launch. On the other hand, SAFTs deal exclusively with accredited investors.

Accredited investors are those who can legally conduct securities transactions. In addition, they meet certain income, net worth, and professional experience requirements. Investor class distinctions enable SAFTs to be classified as a security that satisfies the fundamental requirements of US federal laws.

ContractsCounsel Simple Agreement For Future Tokens Image

Image via Pexels by David McBee

Pros and Cons of SAFT Agreements

There are pros and cons of SAFTs for both investors and startups. On the one hand, SAFTs offer the stability and transparency that fiat markets have come to expect. On the other, this level of control could make the industry bristle since it bases its existence on decentralization and freedom from control.

Below, we’ve created a few pros and cons for your consideration when it comes to using SAFT agreements.

3 Pros of SAFTs:

  1. Potential Standardization. SAFT contracts could result in industry standardization, which would make regulators happy. It would also allow startups to continue using digital token sales to fund the development of their offerings.
  2. Increased Security. ICO scams would significantly decrease, as SAFT contracts are securities that must go through a vetting process. In addition, the SEC would subject the transactions to regulatory oversight at every point in the process.
  3. Wider Investor Base. The advantages of SAFT agreements alone could help expand the investor base for token sales. Not only would they provide some level of security for investors, but they also offer transparency that the public wants.

3 Cons of SAFTs:

  1. Limited Investors. The primary disadvantage of SAFT contracts is that they are only available to accredited investors. This means that small private investors must wait until the token becomes tradable on the secondary market.
  2. Perception. SAFT contracts may appear to work against the crypto movement. The entire premise of crypto and digital currencies is to move toward independence and freedom. Some people may push back against their becoming a standardized element.
  3. Limited Reach. SAFTs were based on the federal laws of the United States. Therefore, they may not gain as much global participation due to a lack of international applicability.

SAFT agreements are a new investment vehicle that assures compliance with US securities laws. They are both simple and effective but should be negotiated and considered carefully with a startup attorney. Regardless of your role, your lawyer can assist you in negotiating and understanding these terms so that it is a meaningful transaction for both parties.

Post a project in ContractsCounsel’s marketplace to get flat fee bids from lawyers for your legal project. All lawyers are vetted by our team and peer-reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Simple Agreement For Future Tokens Lawyers

ContractsCounsel verified
Managing Partner
24 years practicing
Free Consultation

Seasoned technology lawyer with 22+ years of experience working with the hottest start-ups through IPO and Fortune 50. My focus is primarily technology transactions with an emphasis on SaaS and Privacy, but I also provide GC services for more active clients.

ContractsCounsel verified
7 years practicing
Free Consultation

I am a California-barred attorney specializing in business contracting needs. My areas of expertise include contract law, corporate formation, employment law, including independent contractor compliance, regulatory compliance and licensing, and general corporate law. I truly enjoy getting to know my clients, whether they are big businesses, small start-ups looking to launch, or individuals needing legal guidance. Some of my recent projects include: -drafting business purchase and sale agreements -drafting independent contractor agreements -creating influencer agreements -creating compliance policies and procedures for businesses in highly regulated industries -drafting service contracts -advising on CA legality of hiring gig workers including effects of Prop 22 and AB5 -forming LLCs -drafting terms of service and privacy policies -reviewing employment contracts I received my JD from UCLA School of Law and have been practicing for over five years in this area. I’m an avid reader and writer and believe those skills have served me well in my practice. I also complete continuing education courses regularly to ensure I am up-to-date on best practices for my clients. I pride myself on providing useful and accurate legal advice without complex and confusing jargon. I look forward to learning about your specific needs and helping you to accomplish your goals. Please reach out to learn more about my process and see if we are a good fit!

ContractsCounsel verified
Contract and IP Attorney
4 years practicing
Free Consultation

I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.

ContractsCounsel verified
26 years practicing
Free Consultation

A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.

ContractsCounsel verified
11 years practicing
Free Consultation

I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.

ContractsCounsel verified
Principal and Founder
8 years practicing
Free Consultation

Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.

ContractsCounsel verified
Chief Legal Officer
14 years practicing
Free Consultation

Experienced General Counsel/Chief Legal Officer

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call