The SAFT project starts a project with high goals. Above all, this means making Initial Coin Offerings (ICO) more consumer-friendly. In addition, the project wants to secure ICOs legally and act as a middle man. However, the idea is not quite mature yet and received criticism.

The world of the ICOs sometimes seems like an unfathomable, anarchic minefield. They are springing up everywhere, their legal status is sometimes questionable. Especially in matters of state handling, there are discrepancies. For example, while Japan is planning its own ICO on economic recovery, BaFin is warning of the considerable risks. With SAFT, some peace and quiet should enter the confusing world of tokens. The initiators stage themselves as a kind of ICO authority.


SAFT stands for “Simple Agreement for Future Tokens”. The announced agreement should thus regulate that ICOs are handled legally correct. In addition, one wants to guarantee with SAFT that investors do not put their money in the sand.

According to the white paper, SAFT is an investment contract. Suppliers of ICOs should then sell such an agreement to their investors. The contract then obliges the investors to support the developers directly. In return, the developers must use the funds they have acquired to build an effective network.

This network, in turn, should then actually contain functioning and necessary tokens. These are then “delivered” to the investors as soon as they work. Investors are free to resell these tokens.

SAFT should then ensure that the tokens offered conform to the rule of law of the respective countries, both on the investor side and on the consumer side. By securing the functionality of the tokens through the agreement, one can not issue non-functional tokens. Token developers could (or would have to) focus on technical innovation.

SAFT as an intermediary and the Howey test

In principle, the agreement is an intermediary that switches between developers and investors. The investors thus buy a guarantee for the functionality of the coins through money, which in turn goes to the developers through SAFT. Ultimately, investors buy the promise and the security of benefiting from the end product.

The resulting benefit is that the issued coins do not have to comply with the Howey test. The Howey test is a safety standard of U.S. Pat. Supreme Court. This test determines if tokens should be rated as securities.

The intervention therefore ultimately serves to circumvent the classification as securities. As such, the developers of the tokens would have to issue a securities prospectus prior to the actual sale. In addition, you would have to obtain licensing to protect yourself from punishment. Through the detour via SAFT the tokens would not be securities in the view of the initiators. But this is exactly where the developers of SAFT made a mistake.

It’s not that easy then

The Cardozo Blockchain project of the law faculty of Yeshiva University in New York has now responded to the SAFT project in a 13-page report. The result: it is not as simple as the initiators of the project imagine.

The problem:

“Courts and the SEC (SEC) have repeatedly and clearly stated that testing whether a single instrument is a security is not based on set rules, but on relevant and changeable facts, circumstances, and economics Realities “,

is an excerpt from the report for free translation.

Another problem is that the distribution of the ICOs does not create new legal foundations:

“Dividing the investment scheme into multiple parts does not change the fact that accredited investors buy tokens to invest in. Nor will it prevent a court from considering these facts when deciding whether they are securities or not. ”

SAFT promotes speculation

On the other hand, according to the critics, the project encourages investors to pay more attention to the yield rather than the underlying technology. Thus, the actual usefulness comes after the promise of a big profit and make the tokens all the more speculative objects. The idea of ​​making ICOs more consumer-friendly could eventually turn into the opposite.

Another major problem with SAFT is the discrepancy between the project and its feasibility. While the White Paper is currently working on the US Howey test, it also has the vision to be accessible to both investors and developers around the world. Especially in the highly diversified world of cryptography, which ignores national boundaries rather than paying attention to them, it is difficult to reconcile all areas of law and their laws. Finally, when there are problems in the US area of ​​law, it will be difficult to create global regulations.

Another important factor is that the SAFT project can at most be an aid that moves within existing laws. It has no power to influence even laws and to pursue their disrespect. Ultimately, they can only act as intermediaries in order to regulate the framework conditions for ICOs.

SAFT opens up perspectives

As shown again and again and one can also conclude from the present situation, there seems to be a need for uniform regulation – at least as a starting point. So you can finally see the project as what it is – as work in progress. Whether successful or not, there is much to suggest that the network’s proposal may provide food for thought to at least tidy up the anarchic field of the ICOs.

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