What is SAFT? Future Token Agreement Features
By CDLCONLINE 24 on Altcoin Academy
If you studied the features of ICO, you probably heard that with the growth of popularity, regulators began to impose more stringent requirements for them. Given that the number of criminals is growing, this is not surprising. It is difficult for regulators to evaluate the reliability of projects because this cryptocurrency market is not well studied.
In addition, ICOs can transform into goods or any other assets. This has led to the advent of SAFT. According to CDLCONLINE24, these simple investment contracts are designed to help investors avoid misunderstanding and correctly classify ICO coins.
Experts told what Simple Agreement for Future Tokens is, its advantages and disadvantages. You will understand how a simple investment contract works and you can use this knowledge in crypto trading.
What is SAFT?
If you want to understand what Simple Agreement for Future Tokens is, you need to look at the background. With the rise in cryptocurrency prices in 2017, ICOs have gained fantastic popularity. Thanks to the initial offer of tokens, startups raised $ 5.6 billion. However, there was no regulation.
The SEC (the commission that regulates the securities market) is confident that most of the ICOs were aimed at selling security tokens, not official ones. Moreover, many startups did not have a specific product, so such cryptocurrencies were useless.
In fact, investors were really offered to buy coins for future profits (security tokens). Companies that launched such ICOs had to comply with regulatory requirements. But there were big problems with this.
Protocol Lab with Marco Santori from Cooley Law Firm found a solution. They released an official SAFT document. In accordance with this agreement, investment contracts with securities are sold in advance. The scheme works according to the algorithm:
- companies write agreements in which they talk about attracting investor capital for the cryptocurrency that will be released;
- accredited persons acquire these contracts and expect to make a profit;
- SAFTs are registered by the SEC, as they are considered investment contracts;
- startups create cryptocurrency and launch the network;
- investors give away tokens, which are considered official.
Advantages and disadvantages of the SAFT agreement
Experts from cdlconline 24 believe that agreements for future tokens can benefit those involved in crypto trading. Among the benefits, experts point out:
- two-stage process. First, they start an investment contract with securities, and then official tokens appear. Companies launching ICOs have no problems;
- SAFT is available exclusively to accredited investors. Retail customers do not risk funds;
- retail investors have the opportunity to buy coins when the platform starts its work. They can also be participants of the project.
SAFT also has disadvantages:
- in the USA, the financial regulator did not indicate that SAFT is compliant with the law. The main advantage that is being talked about in the crypto community is questionable;
- SAFT does not bring investors profit immediately. Income is promised only in the future. The fact that the company gives tokens to investors after the launch of the platform can be called private sales. And this can already be regarded by the regulator as a violation of regulatory requirements;
- SAFT only complies with US law. In fact, the requirements for securities in various countries are different.
CDLCOnline24 recommends using SAFT carefully! It is better to get the advice of an investment expert and a competent lawyer in advance.
