Tokenized Bonds Regulation and Share Issuance in Europe

Tokenized bonds regulation in Europe rests mainly on national registry laws, with the EU Prospectus Regulation sitting on top. Germany's Electronic Securities Act (eWpG) has allowed bearer bonds to be issued in a crypto securities register since June 2021, and the Swiss DLT Act has recognized ledger-based securities in the Code of Obligations since 1 February 2021. This article explains how each regime works for bonds and shares, how prospectus rules apply, what changes in the cap table and shareholder register, and how to choose a jurisdiction, with notes for issuers targeting US, UK and UAE investors.

Can Shares Be Issued as Tokens in Europe?

Tokenized shares and legal validity

A token is a technical record, and it only represents a share or a bond in the legal sense if a national law allows the security to exist in that form. Most European company laws still assume paper certificates or entries in a central depository, so a company that simply mints a token and calls it a share usually creates a contractual claim with weaker transfer and enforcement rules. Germany and Switzerland are the two main jurisdictions that wrote tokenized securities into their civil law.

EU rules that apply on top

The EU crypto-asset regime does not cover instruments that already qualify as financial instruments, so tokenized bonds and shares stay under MiFID II, the Prospectus Regulation and national company law. Our overview of MiCA and European crypto regulation explains where that boundary sits. For the wider picture of how tokenized instruments are classified, see our legal and practical guide to tokenized securities.

Tokenized equity in practice

Bonds are the easier instrument because a bond is a contract, and both Germany and Switzerland allowed them first. Shares came later in Germany and bring company law questions about the share register, voting rights and the articles of association, which the cap table section below covers.

How Does the German eWpG Work for Electronic Securities?

Central registers and crypto securities registers

The eWpG lets an issuer replace a paper global certificate with an entry in an electronic securities register. There are two types: a central register kept by a central securities depository or a custodian, and a crypto securities register kept on a distributed ledger. A security issued through the second route is called a crypto security, and the register entry takes the place of the certificate for transfer and ownership purposes.

Bonds, fund units and shares

When the law took effect in 2021 it covered bearer bonds and fund units. The Future Financing Act (Zukunftsfinanzierungsgesetz), in force since 15 December 2023, extended the eWpG to shares. A share can sit in a crypto securities register only as a registered share, and the articles of association must expressly allow that form of entry. Bearer shares are limited to the central register.

Registrar licensing and BaFin

Running a crypto securities register is a regulated financial service that needs a BaFin license under the German Banking Act, and the registrar has to notify BaFin before it makes the first entry in a new register. BaFin published guidance on register management on 23 November 2023. The 2026 Standortfördergesetz changed several eWpG provisions, including the former public list of crypto securities, so issuers should check the current consolidated text before relying on older commentary.

What Are Swiss Ledger-Based Securities Under the DLT Act?

Article 973d of the Code of Obligations

The DLT Act added ledger-based securities (Registerwertrechte) to the Code of Obligations. Under Art. 973d, a right becomes a ledger-based security when the issuer and the holders agree on a registration clause and the right is entered in a securities ledger that meets four statutory criteria, including that the creditor can exercise power of disposal over the right through the ledger. The civil-law provisions took effect on 1 February 2021 and the remaining parts of the act on 1 August 2021.

Bonds and shares as ledger-based securities

Both bonds and registered shares can be issued this way, and the statute does not prescribe a particular technology or a license for the ledger operator. Because of that, Swiss issuers usually rely on market standards such as the CMTA standards for shares and debt, and on a registration agreement drafted for the specific ledger. If the ledger stops working as the agreement describes, the issuer carries the resulting liability, which makes the choice of infrastructure provider a legal decision as well as a technical one.

Do Prospectus Rules Apply to Tokenized Securities?

EU Prospectus Regulation

Tokenization changes the form of the security and leaves its legal nature alone, so a tokenized bond offered to the public in the EU needs a prospectus approved by the home regulator unless an exemption applies, such as an offer to qualified investors only. The Listing Act amendments (Regulation (EU) 2024/2809) entered into force on 4 December 2024, and several offer-threshold changes apply from 5 June 2026, so exemption limits should be checked against the current text and against any lower national thresholds.

Swiss FinSA

In Switzerland the Financial Services Act requires a prospectus for public offers of securities unless an exemption applies. The common ones cover offers addressed only to professional clients, to fewer than 500 investors, to investors paying at least CHF 100,000 each, and offers that stay under CHF 8 million over 12 months. Whether a ledger-based security counts as a security for these purposes depends on its standardization and fungibility, which is a point to confirm with Swiss counsel.

US and UK

In the US, SEC staff stated on 28 January 2026 that tokenized securities remain securities, so every offer needs either registration or an exemption such as Regulation D. The UK handles tokenized debt mainly through the FCA and Bank of England Digital Securities Sandbox, where HM Treasury's planned digital gilt pilot is the best-known example. Neither regime reduces the prospectus or exemption analysis for a European issuer selling to investors there.

How Tokenization Affects the Cap Table and Shareholder Register

Germany: crypto shares and the share register

A German stock corporation with crypto shares still has to identify its shareholders at any time, because the Stock Corporation Act requires a share register for registered shares. For example, a GmbH-turned-AG with 1,000,000 registered shares that moves them into a crypto securities register will have the registrar's ledger and the company's own share register, and the two need a defined process for keeping them aligned, including who updates which record after a transfer. The rules on how the registrar entry and the company register interact differ by share type, so the articles of association and the registrar agreement should state them explicitly.

Switzerland: share register on the ledger

A Swiss company that issues registered shares must keep a share register under Art. 686 of the Code of Obligations, and with ledger-based shares that register can be maintained directly on the ledger. Capital increases and other changes to share capital still need an entry in the commercial register, so the on-chain cap table follows the corporate record and does not replace it.

Keeping on-chain and off-chain records consistent

Investors, auditors and later funding rounds all rely on a single authoritative cap table, so the issuer should decide in advance which record prevails in a conflict and say so in the articles and token terms. Convertible instruments, options and shareholder agreements usually sit outside the ledger and have to be reconciled with it by hand, which is where most disputes in tokenized equity projects begin. Our contracts and agreements team drafts the shareholder and subscription documents that connect those records.

Choosing the Issuance Jurisdiction

Germany or Switzerland

Germany gives an issuer a statutory framework with a licensed registrar and a regulated market, and its crypto share rules are recent, so there is less precedent. Switzerland has a flexible Art. 973d framework and a developed set of market standards, but an issuer from outside Switzerland typically needs a Swiss or other local company and a Swiss ledger infrastructure. The choice usually follows the investors: a bond sold to German institutions favors an eWpG structure, while a share issue for crypto-native investors in Zug often favors the DLT Act.

EU passporting and the DLT Pilot Regime

An EU prospectus approved in one member state can be passported to others, which is the main advantage of issuing from Germany or another EU country. Regulation (EU) 2022/858, the DLT Pilot Regime, provides a separate sandbox for DLT market infrastructures, and ESMA's June 2025 report recommended making it permanent and relaxing its thresholds. The Commission's proposal was still moving through the legislative process at the time of writing, so it should not be treated as final.

UK, US and UAE investors

Selling to US investors requires a US exemption on top of the European structure, and UK sales fall under the FCA financial promotion and prospectus rules. In the UAE, the ADGM treats tokenized securities as securities under its financial services regulations, while the federal framework and the DFSA approach need separate confirmation for each offer. For issuers who sell in several of these markets, a holding structure set up with corporate services support often keeps the registers and the regulatory perimeter cleaner.

Final Thoughts

For a bond, the practical sequence is to select the register (an eWpG crypto securities register or a Swiss ledger), settle the prospectus or exemption position in each target market, and sign the registrar or ledger agreement before the first token is created. For shares, the articles of association have to allow the tokenized form first, and the cap table process has to be agreed with the registrar before a financing round. Fees, timing and licensing status differ by registrar and should be confirmed with them directly.

Icon.Partners advises issuers on the corporate, securities and structuring side of these projects, including the legal requirements for tokenized equity issuance.