SAFT

What is SAFT?

Developers of cryptocurrencies can offer accredited investors a simple agreement for future tokens (SAFT), a type of investment contract. SAFTs were developed to make it easier for bitcoin projects to generate money without breaking the law.

SAFT agreements reward qualified investors for providing early capital. The cryptocurrency firm will issue tokens at a discount to their market value or worth in the event of a liquidation, similar to convertible notes.

In essence, a SAFT gives the company the ability to delay the token's value. Some SAFT contracts might contain a valuation cap. Therefore, parties who raise funds through a SAFT with a valuation cap engage in a valuation negotiation. It's not necessary to include SAFTs as debt on the balance sheet.