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Token Side Letter / Token SAFE (Future Token Right)
An investment agreement giving a purchaser the right to receive future network tokens, structured to survive current U.S. securities scrutiny.
What is a Token Side Letter / Token SAFE?
A Token Side Letter / Token SAFE (Future Token Right) is an investment agreement giving a purchaser the right to receive future network tokens, structured to survive current U.S. securities scrutiny.
Built for a crypto/web3 project raising capital by promising future tokens to early backers, either as a standalone token purchase or as a rider bolted onto an equity SAFE.
Token Side Letter / Token SAFE template, current for 2026
The form carries post-money SAFE-style discount mechanics, a network-launch lockup and release schedule, an explicit dissolution/no-launch return provision, a 2026 Reg D 506(c)/506(b) accreditation path, a securities-status acknowledgment that does not over-promise a utility outcome, and a sanctions/OFAC and Travel Rule wallet-eligibility gate absent from older SAFT forms.
How HDAi does this differently
Unlike a static form, HDAi runs a guided interview and assembles your Token Side Letter / Token SAFE as you answer. When you want it finished, a licensed Hart David Carson attorney reviews it and tailors it to your facts before you sign. The interview and the first draft are automated. The judgment belongs to an attorney.
What you’ll be asked
A short interview in plain language that asks only what this document needs.
- Which company is issuing the token right? This is the entity (usually a Delaware corporation or foreign token-issuing foundation/DevCo) that takes the investor's money and promises future tokens. It signs the agreement and owes the obligations.
- What type of entity is the Company? Governs which formalities and signature block apply. Most U.S. token SAFEs are signed by a Delaware C-corp; some use a foundation or an offshore DevCo.
- Company's jurisdiction of organization (state or country)? Named in the recitals and used for the entity's internal-affairs law. Distinct from the governing law of the contract itself.
- Company's notice address? Where formal notices under the agreement are delivered. Should be a real, monitored address.
- Name of the person signing for the Company? The authorized officer who binds the Company. Appears in the signature block.
- Title of the Company's signatory? Confirms signing authority for the counterparty and for later enforcement.
- Has the Company confirmed no covered person is a Rule 506(d) bad actor? Rule 506(d) disqualifies a Reg D offering if any covered person (the issuer, its directors, executive officers, officers participating in the offering, or 20%-plus voting owners) has a disqualifying event such as certain securities-fraud convictions, injunctions, or regulatory orders. The Company should screen all covered persons before relying on the exemption. This answer drives the bad-actor representation.
- Who is the investor (Purchaser)? The person or entity paying the purchase amount in exchange for the future token right. This party's identity drives the accredited-investor and transfer representations.
- Is the Purchaser an individual or an entity? Determines the form of the signature block and the accredited-investor test that applies.
- Purchaser's notice address? Where the Company sends notices, token-delivery instructions, and closing confirmations.
- If the Purchaser is an entity, name of the person signing? The authorized representative binding an entity investor. Leave blank for an individual investor signing personally.
- If the Purchaser is an entity, title of the signatory? Confirms the representative's authority to bind the entity investor.
- Will the Purchaser hold 20% or more of the Company's voting equity (triggering an investor bad-actor rep)? A 20%-plus beneficial owner of voting equity is itself a Rule 506(d) covered person, so its own bad-actor status can disqualify the offering. If yes, the Purchaser makes a reciprocal representation that it is not subject to a disqualifying event.
- What is the purchase amount (USD)? The dollars the Purchaser pays now. This is the consideration for the future token right and, if applicable, any equity/discount mechanics.
- Effective date of the agreement? The date the agreement is entered into and from which its timelines (network launch deadline, lockups) run.
- How is the purchase amount paid? Fiat vs. digital-asset payment changes the delivery mechanics, valuation, and AML/sanctions handling in the payment section.
- If paying in a digital asset, which asset and on what network? Specifies the exact token and chain so the payment obligation and valuation are unambiguous.
- How many days after signing must the purchase amount be paid? Sets the funding deadline. A short window (3 to 10 days) keeps the deal current and lets the Company terminate for non-payment.
- What structure is this instrument? A token-only SAFT-style right vs. a hybrid SAFE that also converts to equity. The hybrid form better survives Howey scrutiny by tying the token right to a genuine equity investment.
- What is the network's token called (or working name)? Names the tokens to be delivered. A working/placeholder name is fine and signals the network is not yet live, which matters for the securities analysis.
- What is the network/protocol name? Identifies the decentralized network whose native token is promised. Used throughout the recitals and delivery terms.
- How is the number of tokens the Purchaser receives determined? A fixed percentage of supply, a fixed token count, or a discount-to-sale-price formula. Each has different dilution and valuation consequences.
- What percentage of the total initial token supply does the Purchaser receive? Used when allocation is a fixed share of supply. Expressed as a percent of the fully-diluted genesis supply.
- How many tokens will the Purchaser receive? Used when the allocation is a fixed token count set at signing.
- Stated per-token price (USD)? Used with the price-formula method. Tokens delivered equal the purchase amount divided by this price, subject to any discount.
- Discount rate off the public sale/reference price? Rewards early risk. Applied to the network's public sale price or the stated reference price to set the Purchaser's effective token price.
- Network valuation cap for the token right (USD), if any? Caps the implied network valuation at which the Purchaser's tokens are priced, guaranteeing a minimum allocation if the network launches at a high value. Leave blank if not used.
- If a hybrid, what is the equity SAFE valuation cap (USD)? Only for the hybrid structure. This is the post-money cap governing the equity conversion of the SAFE portion.
- If a hybrid, what is the equity SAFE discount rate (%)? Only for the hybrid structure. This is the discount applied to the priced-round price when the SAFE portion converts to equity.
- Outside date by which the network must launch / tokens must be generated? If the network does not launch by this date, the dissolution/refund and equity-conversion remedies trigger, and the Company's development covenant is measured against it. Anchors the whole instrument to a real deliverable.
- What happens if the network never launches by the deadline? The fallback protects the Purchaser and shapes the securities analysis. Options range from a cash return to conversion into equity.
- What event triggers token delivery to the Purchaser? Delivery is usually tied to the network's mainnet launch or the first broad token availability. This event, not signing, is when the Purchaser first receives tokens.
- Within how many days of the trigger event must tokens be delivered? Gives the Company an operational window to distribute tokens after the trigger, while binding it to a deadline.
- What lockup / vesting applies to the delivered tokens? A lockup and gradual release reduce dumping risk and reinforce that the Purchaser is a long-term participant rather than a trader, a factor courts weigh in the securities analysis.
- Lockup / cliff length in months? The initial period during which no delivered tokens are transferable. A 12-month cliff is common and aligns with Rule 144-style holding-period thinking.
- Total vesting period in months (including the cliff)? For linear vesting after the cliff, the full period over which tokens are released. Only relevant to the cliff-then-linear structure.
- Include a Most Favored Nation (MFN) clause? An MFN lets this Purchaser adopt more favorable terms the Company later grants another token-right investor. Standard in SAFE/SAFT practice.
- Grant the Purchaser a pro rata right to buy tokens in a future public sale? A pro rata right lets the Purchaser maintain its share by participating in the network's public token sale. Optional early-investor sweetener.
- Under which exemption is the offering made? Nearly all U.S. token SAFEs are sold only to accredited investors under a Reg D exemption. 506(c) permits general solicitation but requires verification, 506(b) prohibits solicitation, and Reg S is for offshore sales to non-U.S. persons.
- For a 506(c) offering, how will accredited status be verified? Rule 506(c) requires reasonable steps to verify accredited status. Common methods are reviewing income documents, reviewing net-worth documents, obtaining a third-party professional confirmation, or (for a previously verified investor within the safe harbor) a written re-confirmation.
- What is the intended U.S. federal income tax characterization? Token prepurchase instruments are commonly treated as an option, a prepaid forward contract, or an open transaction; the choice affects timing and character of income. Selecting one adds a consistency covenant. Choose 'not agreed' to leave it open. Consult tax counsel.
- How restricted are transfers of this instrument and the tokens? Tight transfer restrictions support the private-placement exemption and the securities analysis. The strictest option bars all transfers without consent.
- How are disputes resolved? Confidential arbitration is common for token deals; some parties prefer court. This drives the dispute-resolution and venue clauses.
- If arbitration, which body and seat? Names the administering institution and the legal seat of arbitration. Only used if you chose arbitration.
- Governing law (state)? The state law that governs the contract. Delaware and New York are the usual choices for U.S. token instruments.
- Venue for disputes (city, state)? Where litigation or arbitration is seated. Used in the venue and consent-to-jurisdiction clause.
- Company's email for notices? Modern token deals permit email notice. This is the Company's designated address.
- Purchaser's email for notices? The Purchaser's designated email for notices and token-delivery coordination.
Frequently asked
About the Token Side Letter / Token SAFE and how HDAi works.
What is a Token Side Letter / Token SAFE (Future Token Right)? +
A Token Side Letter / Token SAFE (Future Token Right) is an investment agreement giving a purchaser the right to receive future network tokens, structured to survive current U.S. securities scrutiny. A crypto/web3 project raising capital by promising future tokens to early backers uses it, either as a standalone token purchase or as a rider bolted onto an equity SAFE.
Is HDAi's Token Side Letter / Token SAFE (Future Token Right) legally binding? +
The Token Side Letter / Token SAFE (Future Token Right) HDAi generates is a professionally drafted document that becomes binding once it is completed, reviewed, and properly signed. If you want a licensed Hart David Carson attorney to finish it, book a planning call. The firm's flat-fee packages, the Illinois Family Plan and Company Launch, cover the most common needs; for any other draft, an Illinois attorney will tell you on the call what finishing it would involve.
Do I need a lawyer to use this Token Side Letter / Token SAFE (Future Token Right)? +
You can generate and download the Token Side Letter / Token SAFE (Future Token Right) in minutes, free of charge. A licensed Hart David Carson attorney can then review it and tailor it to your facts before you sign, which is the part no template can do.
What makes this Token Side Letter / Token SAFE (Future Token Right) current for 2026? +
The form carries post-money SAFE-style discount mechanics, a network-launch lockup and release schedule, an explicit dissolution/no-launch return provision, a 2026 Reg D 506(c)/506(b) accreditation path, a securities-status acknowledgment that does not over-promise a utility outcome, and a sanctions/OFAC and Travel Rule wallet-eligibility gate absent from older SAFT forms.
How long does the Token Side Letter / Token SAFE (Future Token Right) take? +
Estimated time about 24 min (48 questions), depending on how much you already know. The document assembles as you answer. Export it as PDF or Word, or send it to a Hart David Carson attorney for review.
Does this Token Side Letter / Token SAFE (Future Token Right) work in my state? +
HDAi's interview is state-aware. If you ask an attorney to finish the draft, a licensed Hart David Carson attorney confirms it against your state's requirements before you rely on it. Validity and required formalities vary by state.
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