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Simple Agreement for Future Tokens
"I need an agreement for future tokens with a vesting schedule of 18 months, a total token allocation of 10,000 tokens, and a 6-month cliff for a blockchain startup."
What is a Simple Agreement for Future Tokens?
A Simple Agreement for Future Tokens (SAFT) lets blockchain startups raise funds by promising investors future access to their digital tokens or coins. It works like a forward contract, giving investors rights to tokens once the company launches its blockchain platform. In Saudi Arabia, these agreements align with the Capital Market Authority's fintech regulations and Shariah-compliant investment principles.
SAFTs help protect both investors and developers during early-stage blockchain projects. The investor provides capital now, while the company commits to delivering tokens later - but only after building the network and ensuring compliance with Kingdom's securities laws and SAMA guidelines. This structure has become popular among Saudi tech startups looking to balance innovation with regulatory requirements.
When should you use a Simple Agreement for Future Tokens?
Use a Simple Agreement for Future Tokens when your blockchain startup needs early funding but can't issue tokens immediately. This approach works especially well for Saudi tech companies developing decentralized platforms that require significant development time before launch. The SAFT structure helps navigate the Kingdom's regulatory requirements while securing investment capital.
The timing is crucial - implement SAFTs during your initial fundraising phase, before your blockchain network becomes fully operational. Many Saudi fintech companies use these agreements when seeking Shariah-compliant investment from qualified investors, particularly when the final token structure depends on future technical development and regulatory approval from SAMA or the Capital Market Authority.
What are the different types of Simple Agreement for Future Tokens?
- Standard Cryptocurrency SAFT: Basic agreement designed for pure digital token offerings, following Saudi Arabia's fintech sandbox guidelines and Shariah compliance requirements
- Utility Token SAFT: Modified version for platforms offering functional access rights rather than investment returns, structured to meet CMA regulations
- Hybrid SAFT: Combines elements of traditional investment agreements with token rights, popular among Saudi tech startups seeking institutional funding
- Staged Release SAFT: Includes milestone-based token distribution schedules, offering increased investor protection while maintaining Shariah compliance
Who should typically use a Simple Agreement for Future Tokens?
- Blockchain Startups: Saudi tech companies developing decentralized platforms use Simple Agreement for Future Tokens to secure early-stage funding while building their networks
- Qualified Investors: High-net-worth individuals and institutional investors who provide capital in exchange for future token rights under CMA guidelines
- Legal Counsel: Saudi-licensed attorneys who structure and review SAFTs to ensure compliance with Kingdom's securities laws and Shariah requirements
- Fintech Compliance Officers: Internal teams ensuring adherence to SAMA regulations and sandbox requirements throughout token development
- Shariah Advisors: Islamic finance experts who verify the agreement's compliance with Islamic principles
How do you write a Simple Agreement for Future Tokens?
- Project Details: Document your blockchain platform's technical specifications, development timeline, and token functionality
- Investor Verification: Confirm investor qualifications under CMA regulations and collect KYC documentation
- Token Economics: Define token distribution terms, vesting schedules, and conversion mechanisms that align with Shariah principles
- Regulatory Compliance: Ensure alignment with SAMA's fintech guidelines and sandbox requirements
- Legal Framework: Our platform generates customized SAFTs that incorporate all required elements under Saudi law
- Shariah Review: Obtain necessary Islamic finance certifications before finalizing the agreement
What should be included in a Simple Agreement for Future Tokens?
- Token Rights: Clear description of future token characteristics, delivery conditions, and vesting schedule
- Shariah Compliance: Explicit statements confirming adherence to Islamic finance principles
- Investment Terms: Purchase amount, valuation caps, and token conversion mechanisms
- Regulatory Disclaimers: References to CMA and SAMA requirements for digital asset offerings
- Risk Disclosures: Comprehensive outline of project risks and investor acknowledgments
- Dispute Resolution: Saudi arbitration provisions and governing law clauses
- Termination Rights: Conditions for agreement cancellation and capital return procedures
What's the difference between a Simple Agreement for Future Tokens and a Simple Agreement for Future Equity?
A Simple Agreement for Future Tokens (SAFT) differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects, though both are investment instruments used in Saudi Arabia's startup ecosystem.
- Asset Type: SAFTs promise future blockchain tokens or cryptocurrencies, while SAFEs convert to company equity shares
- Regulatory Framework: SAFTs must comply with both SAMA's fintech regulations and Shariah law for digital assets, whereas SAFEs follow traditional CMA equity investment rules
- Conversion Triggers: SAFTs typically convert upon network launch or token generation events, while SAFEs convert during equity financing rounds
- Investment Purpose: SAFTs specifically fund blockchain platform development, but SAFEs support general business growth across any sector
- Risk Profile: SAFTs carry unique technological and regulatory risks related to token development, unlike SAFEs' standard equity risks
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