SAFT and Token Warrant are the two main instruments for a crypto project’s seed round. A SAFT gives an investor the right to future tokens, while a Token Warrant adds that right to an equity deal. We go through how they differ, what regulatory risks they carry and which to choose for a crypto seed round.
Checked on 21 October 2026. Rules and sources are current as of this date.
What is a SAFT
SAFT (Simple Agreement for Future Tokens): an investor funds an early-stage project and receives the right to tokens once the network launches. It is the crypto equivalent of a SAFE: a SAFE grants future equity, a SAFT grants future tokens.
A standalone document with no equity in the company. It suits crypto-native funds interested in tokenomics, and rounds close fast.
Legal nature
In the U.S. the SAFT itself is generally treated as a security, so it is sold under private placement exemptions. The bet is that the future token will be classified as a utility token. But in SEC (US Securities and Exchange Commission) v. Telegram (2020) the court viewed the sales under the purchase agreements and the later distribution of tokens as a single scheme, and the company returned more than $1.2 billion to investors. In March 2026 the SEC replaced its 2019 digital asset framework with a new interpretation (Release 33-11412). It says that a sale under a simple agreement for future tokens takes place when the agreement is signed, and that the token stays tied to the investment contract until the issuer has fulfilled and publicly disclosed what it promised.
Structure
A standalone document: the investor buys only the right to tokens. It is relatively simple, so deals close quickly.
Regulatory uncertainty: the SEC or another regulator may disagree that the token is a utility, and then its issuance and trading fall under securities law. Misaligned interests: investors may want quick profit after the TGE (token generation event) and pressure the token price.
What is a Token Warrant
A Token Warrant (Token Side Letter) is not a standalone instrument but an addendum to a SAFE or equity round. The investor receives equity and in addition the right to buy part of the future tokens at an agreed price or discount.
The main deal is standard, so regulators and traditional VCs understand it better. The warrant itself is also a security.
Dual exposure
The investor shares in the success of both the company (equity) and the network (tokens).
Aligned interests
The investor is also a shareholder, so they care about long-term value, not only the token price. Traditional venture funds find this structure easier to join.
Structuring: two sets of documents (equity and tokens) make the deal costlier and slower. Valuation: you need to split value fairly between the equity and the token right.
SAFT vs Token Warrant: comparison
We will review your situation and propose a solution for your project.
Which instrument to choose
Choose a SAFT if
Your project is mainly a decentralized protocol with minimal corporate structure.
Your investors are crypto-native funds that do not want equity.
Speed of closing the round comes first.
You and your counsel are confident in a utility argument for the token.
Choose a Token Warrant if
Your project is a hybrid: a development company plus a decentralized network.
You raise from traditional VCs for whom equity is standard.
You want strong long-term alignment with investors.
You prefer a conservative, regulator-predictable approach, even if more complex.
The choice affects your current round, future fundraising and regulatory exposure. Our Contracts and documents and Company structure services can help prepare the paperwork and the deal structure.
A SAFT is faster, a Token Warrant is sturdier. Your project model decides which matters more.The LegalBit team
Common mistakes when structuring a round
Betting on utility without analysis
You cannot simply declare a token to be a utility token. Regulators look at what the token actually does, how it is sold and what investors expect.
Documents that diverge from the tokenomics
The terms of a SAFT or warrant contradict the whitepaper and the real token release schedule, which gives investors grounds for claims.
Ignoring investors’ home markets
Investors come from different countries, and each applies its own rules on private placements, investor status and restrictions on raising funds.
No unlock plan
Vesting and the terms for delivering tokens after the network launches are not set out. This is a source of disputes and pressure on the token price.
How the deal runs and what the lawyer does
Choosing an instrument is only the first step. Next the deal has to be built so that the documents, the company structure and the tokenomics do not contradict each other.
Token analysis
We assess the token’s function and its likely classification under crypto-asset rules, for example MiCA in the EU and the Howey test in the US.
Structure and jurisdiction
We decide which entity issues the tokens and takes the investment, and where it is best incorporated.
Documents
We prepare the SAFT or Token Warrant, the SAFE or share documents, and the vesting and unlock terms.
Investor compliance
We check investors against KYC/AML requirements and apply available private-placement exemptions, for example Reg D and Reg S in the US.
Frequently asked questions
What is the difference between a SAFT and a Token Warrant?
A SAFT is a standalone contract for future tokens with no equity in the company. A Token Warrant is an addendum to an equity or SAFE deal that also gives the investor the right to buy tokens. So a SAFT is simpler and faster, while a Token Warrant is more complex but more familiar to traditional venture funds.
What is a SAFT in simple terms?
A contract where the investor pays the project now and receives tokens after the network launches. It is the token version of a SAFE for equity.
Can a SAFT token be treated as a security?
Yes. In the U.S. the SAFT itself is generally treated as a security, and a regulator may also disagree that the future token is a utility. If the token is deemed a security, its issuance and trading fall under securities law.
Which should a crypto project choose for a seed round?
If the project is mostly a decentralized protocol, investors are crypto-native funds and speed matters, a SAFT is common. If there is a development company and you raise from traditional VCs, a Token Warrant fits better. The final choice depends on your model, investors and tolerance for regulatory risk.
What is the difference between a SAFT and a SAFE?
A SAFE (Simple Agreement for Future Equity) was created at Y Combinator in 2013 and converts into shares automatically when a startup raises a priced round. A SAFT follows the same logic, but the investor receives tokens after the network launches instead of equity. The SAFT whitepaper (Cooley and Protocol Labs, 2017) says it was modelled on the SAFE.
What terms does a SAFT agreement usually contain?
In the 2017 whitepaper model, the investor pays the price up front and the tokens are delivered once the network has launched and the tokens work. The investor gets a discount on the price of the final token sale. In the U.S. the sale is limited to accredited investors under Rule 506(c) of Regulation D. The SAFT itself is not transferable, and the investor’s rights end once the tokens are delivered. In a real deal the terms are adjusted to the project’s tokenomics and whitepaper.
What is SAFT funding, and is it an investment?
It is a deal where an investor pays the project now and receives the right to tokens later. The authors of the model treat the SAFT itself as a security (an investment contract), so in the U.S. it is sold under exemptions such as Rule 506(c) of Regulation D. The token is assessed separately; see the risks section above.
- SEC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release 33-11412, 17 March 2026)
- SEC: Telegram to return $1.2 billion to investors (2020)
- EUR-Lex: Regulation (EU) 2023/1114 (MiCA)
- Y Combinator: The SAFE
- The SAFT Project: whitepaper (Cooley, Protocol Labs), 2 October 2017
See also: SAFT vs SAFE: what is the difference; Legal Support for Token Sales Procedure; What is Know Your Customer (KYC) and why is it essential for cryptocurrency exchanges?. Services: legal services for crypto projects.
