A SAFE and a SAFT work the same way: the investor pays now and receives the asset later. The difference is what the investor receives: equity under a SAFE, tokens under a SAFT. That drives the price, the regulatory risk and who the instrument suits. We go through how the two instruments differ, how to choose between them and when a SAFE with a token warrant fits.
Checked on 21 October 2026. Rules and sources are current as of this date.
What is a SAFE
The SAFE (Simple Agreement for Future Equity) was created by Carolynn Levy at Y Combinator in 2013. It is a short contract: the investor puts money into a startup now and gets the right to shares later. The shares appear automatically when the company closes a priced round.
Not debt, not equity
Y Combinator describes the SAFE as having no interest and no maturity date. It becomes stock only when it converts into preferred stock in a priced round.
Cap and discount
The valuation cap sets the maximum valuation at which the SAFE converts. The discount gives a price below the round price, usually 10-20%. The MFN (most favoured nation clause) version has no cap or discount and takes the best terms from any SAFE issued later.
Exit and dissolution
On a sale of the company or an IPO (initial public offering), the investor receives the greater of the amount invested or what they would get if the SAFE converted into common stock. On dissolution the investment amount is returned. SAFE claims rank behind debt.
Transfer and investors
A SAFE cannot be transferred without the company’s consent, except to an affiliate of the investor. SAFE investors must be accredited.
What is a SAFT
The SAFT (Simple Agreement for Future Tokens) was described in The SAFT Project white paper of 2 October 2017 by Juan Batiz-Benet, Jesse Clayburgh and Marco Santori (Protocol Labs and the law firm Cooley). It is modelled on the SAFE: the investor pays the project at once and receives tokens after the network launches.
Payment upfront
The investor pays the price at once and gets no tokens at that moment. Tokens are delivered after the network launch, and the SAFT rights end on delivery.
Discount
The investor gets a discount to the price of the eventual token sale.
Investors
In the US the sale goes only to accredited investors, for example under Rule 506(c) of Regulation D with a Form D notice to the SEC (US Securities and Exchange Commission). The SAFT itself is not transferable.
The authors’ position
The white paper treated the SAFT itself as a security (an investment contract) and expected to present the token, once the network is live, as a consumer product rather than a security.
Regulatory status: what changed in 2026
On 17 March 2026 the SEC published the interpretation Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release No. 33-11412), effective 23 March 2026. It replaced the 2019 Framework for “Investment Contract” Analysis of Digital Assets, which the SEC withdrew.
Five categories
The SEC groups crypto assets into digital commodities, digital collectibles, digital tools, stablecoins and digital securities. The first three are not securities in themselves.
Investment contract
Such an asset can still be sold under an investment contract, and an investment contract is a security. The token does not become a security because of that.
Deferred delivery example
The interpretation names a “simple agreement for future tokens”. The sale is complete when the contract is signed, even if the tokens are delivered later. From then the tokens are tied to the investment contract regardless of the delivery date.
After delivery
Tokens stop being tied to the investment contract once the buyer can no longer expect profit from the issuer’s efforts, for example when the issuer has publicly disclosed that it completed the key managerial efforts it promised. If the issuer keeps making such efforts or has not disclosed completing them, the tie remains.
On the SEC’s logic, a token sale under a SAFT is an investment contract transaction from signing. What happens to the token after delivery depends on what the project promised investors and whether it delivered.
According to the SEC, Telegram sold about 2.9 billion Gram tokens to 171 initial purchasers. In March 2020 the Southern District of New York enjoined delivery, finding the SEC likely to show that the sales were part of a scheme to distribute the tokens on the secondary market. In June 2020 Telegram agreed to a final judgment without admitting or denying the allegations: return more than $1.2 billion and pay an $18.5 million penalty.
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SAFT vs SAFE: comparison
Terms as described by Y Combinator and The SAFT Project white paper.
| SAFE | SAFT | |
|---|---|---|
| What the investor gets | Company shares | Network tokens |
| When | At a priced round | After the network launches and tokens work |
| Legal nature | Not debt, not equity until conversion | Contract for future token delivery |
| Price | Valuation cap and discount | Discount to the eventual token sale price |
| Term | No maturity date | Tied to the network launch |
| Transfer | Only with company consent or to an affiliate | Not transferable |
| Investors | Accredited | Accredited in the white paper model (506(c)) |
| Main risk | Dilution, conversion terms | Status of the token and of the sale |
Which to choose
SAFE
Fits when the project is an ordinary company that needs capital for equity and the token does not exist yet or is secondary. Venture funds know the instrument and it closes fast.
Start hereSAFT
Fits when you build a protocol or network, the token is the core of the economy, and investors are crypto-native funds that want tokens rather than a stake. The document needs a legal assessment of the token and the whole sale structure.
Both together
If the project has both a company and a network, a SAFE with a token warrant is common. We compared that option with the SAFT in a separate article.
Choosing a SAFT out of habit when there is no token. Assuming the token is “not a security” by itself: the SEC looks at what the project promised and does, and the label “utility” decides nothing. Letting the contract, the white paper and the tokenomics contradict each other. Not checking private placement rules in the investors’ countries.
A SAFE sells a stake in the company, a SAFT sells a future token. The legal risks are different.The LegalBit team
FAQ
What is the main difference between a SAFT and a SAFE?
Under a SAFE the investor receives company shares, under a SAFT network tokens. A SAFE converts at a priced round, a SAFT is performed after the network launches.
Can a SAFE be used to sell tokens?
A SAFE gives a right to shares, not tokens. If the investor wants both equity and tokens, a token warrant or a separate agreement is added to the SAFE.
Are accredited investors required?
Y Combinator states that SAFE investors must be accredited. In the SAFT white paper model the sale also goes to accredited investors under Rule 506(c). Other jurisdictions have different rules.
Is a token sold under a SAFT a security?
On the SEC’s 2026 position the token itself may not be a security, but its sale under a SAFT is made under an investment contract. After delivery the status depends on whether the issuer did what it promised and disclosed it publicly.
See also: SAFT vs Token Warrant; Legal Support for Token Sales Procedure; Regulation Crypto Assets: How the SEC Proposes to Regulate Token Sales in the US; P2E game token: security, payment instrument or in-game currency. Services: legal services for crypto projects.
- Y Combinator: The SAFE
- The SAFT Project: white paper (Cooley, Protocol Labs), 2 October 2017
- SEC: Application of the Federal Securities Laws to Certain Types of Crypto Assets, Release 33-11412 (17 March 2026)
- SEC: Framework for “Investment Contract” Analysis of Digital Assets (withdrawn)
- SEC: Telegram to return $1.2 billion to investors (2020)
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