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SAFT not so SAFE? ... Cooley's SAFT framework takes some heat

Cooley's SAFT Framework presents a nice set of documentation for funding an ICO in two stages: (i) Sale of a right to future tokens to accredited investors; and (iii) once the application is developed, distribution of functional utility tokens to the SAFT investors and general sale to the public of these functional utility tokens.  The SAFT authors posit that a token that has immediate and actual utility on issuance (other than a share in profits or equity stake in the venture) is probably not a security.

In response, the Cardozo Law School Blockchain Project published a paper refuting some of the claims of the SAFT paper.  The criticism focuses on the SAFT suggestion that post-functional utility tokens are generally not securities - which the Cardozo authors suggest is a bright line test that goes too far.  They suggest that each token must be viewed with it's own facts and circumstances to determine if it is a security.  They go on to point out how some aspects of the SAFT framework can hurt and not help the positioning, and increase risks on certain sales.

As Marco Santori pointed out when he released it, the SAFT Framework was an invitation for discussion and not the final word on what is and what isn't a security.  We should expect feedback and possible some adjustment to SAFT to counter these new concerns.

 

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