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Introducing tokenized SAFTs

Introducing tokenized Dala SAFTs © istockphoto / zenstock

Earlier this week we saw the official release of the Simple Agreement for Future Tokens (SAFT) framework for issuing cryptocurrency tokens in the US, following on from an announcement about the project at Coin Summit in New York earlier this year. There has been significant uncertainty around the legal status of cryptocurrency tokens, especially following the SEC’s report on the Ethereum DAO. The SAFT framework removes some of the legal uncertainty by enabling anyone in the US to sell cryptocurrency tokens that comply with SEC Regulation D Rule 506(c) (“506(c)”)to Accredited Investors.

As it turns out, we’ve been in the middle of preparing for the Dala token sale during September 2017 and US counsel were advising us to consider excluding the US completely from the token sale due to regulatory uncertainty. We refused to give up on giving backers in the US an opportunity to participate. Elsewhere in the world, we’ve spent enough time with counsel in Switzerland, Singapore and the Cayman Islands to have a high level of comfort that the Dala token is not a security. It’s probably useful to understand why token issuers don’t want to issue securities:

the costs of doing a public sale of securities in the US are ridiculously high,issuing a security in terms of 506(c) means that it can only be sold to Accredited Investors who also cannot resell the security for 12 months, andcurrent token exchanges are not licensed to trade in US securities, so the token wouldn’t have liquidity.

So, we’re going to sell SAFTs for Dala to only US backers that are also accredited investors, during the pre-sale. US backers will not be able to participate in the public sale. Non-US backers will still be able to participate in the pre- and public sale for Dala. Everyone else outside the US will be able to participate in the pre-sale and public sale without a SAFT. SAFT subscribers in the US won’t be able to use or...

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