FAQs for Investors
An Alternative Investment is a financial asset that cannot be categorized under traditional investment space. Traditional categories comprise bonds, stocks, and cash money whereas Alternative investments comprise of private equity, hedge funds, venture capital, art pieces, and antiques, managed futures, commodities, derivatives contracts and real estate as well. Most of these alternative investments are managed by high profile institutional investors or accredited investors due to their complex nature, risks involved and non-clarity on regulations.
SAFT stands for ‘Simple Agreement for Future Tokens’ which is an investment contract offered by crypto-asset developers to the registered investors. It meets the terms for securities and thus complies with security regulations.
According to the Securities law of 1933 and Securities Act of 1934 transactions that meet the criteria for ‘investment contracts’ are considered as securities and are liable to specific terms and conditions for disclosure and registration process. In the historical verdict of Howey vs. SEC lawsuit in 1946, the Supreme Court of the US evaluated the term ‘investment contract’ under four factors to decide whether it qualifies the securities category or not. Since then, the Howey Test is being deliberated to qualify anything under Securities. i) If it is an investment of money ii) If there is the expectation of profits from the investments iii) If the investment of money is in a common enterprise iv) If any profits are gained solely from the effort of promoter or others.