The SAFT may be a cousin of the SAFE – but the relationship comes with strings attached and anyone considering doing down the rabbit hole should consider potential implications very carefully.
The rise of ICOs has been difficult to ignore. What was once seen as a gimmick is now threatening to reshape the fundraising industry. This is particularly the case for VCs and investors who are concerned with very early stage investments. The fear of missing out (FOMO) and being left behind the curve has prompted VCs and other “institutional” type investors to look for ways to hop on the bandwagon and enjoy the returns that have been absent from more traditional asset classes. Despite the appetite for the newly created instruments, a number of institutions faced the same problem – their mandates prevented them from investing in such instruments.
There is also the matter of regulation. Most ICOs have operated under the assumption that the associated tokens are a utility, and should not be categorized as securities. Selling security tokens without appropriate registration with the relevant regulatory body risks jeopardizing the entire project. However, the distinction between security and utility tokens has become even muddier in recent …
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