Issuing a Digital Bond: The Process in 7 Steps

Short answer

In Germany, a digital bond is usually a bearer bond that, under section 2(1) of the Electronic Securities Act (eWpG), is issued not by a certificate but by entry in an electronic securities register, frequently a crypto securities register under section 16 eWpG. The process comprises seven steps from product selection to ongoing administration. At heartstocks, a simple digital bond with a standard structure takes around 6 weeks if the client documentation is complete at kick-off; issuances requiring a prospectus or KAGB structures with special terms take around 3 months.

At a glance

Issued by register entry instead of a certificate (section 2(1) eWpG); the electronic security is deemed a thing (section 2(3) eWpG).
The terms of issue must be deposited with the registrar before entry (section 5(1) eWpG).
Operating a crypto securities register generally requires a licence (section 32(1) in conjunction with section 1(1a) sentence 2 no. 8 KWG; exemptions include section 32(1f) KWG).
Prospectus-free below EUR 12m per issuer or offeror over 12 months (Art. 3(2) Prospectus Regulation); in Germany such offers generally require a WIB from EUR 100,000 (section 4 WpPG).
Timing at heartstocks: around 6 weeks (simple bond, standard structure) or around 3 months (prospectus required or KAGB structure with special terms).

What is a digital bond in legal terms?

A digital bond is a bearer bond within the meaning of section 793 of the German Civil Code (BGB) issued as an electronic security. Under section 1 no. 1 eWpG, the Electronic Securities Act applies to bearer bonds. Under section 2(1) eWpG, the issuer effects an entry in an electronic securities register instead of issuing a certificate. Unless the eWpG provides otherwise, the electronic security has the same legal effect as a certificated security (section 2(2) eWpG).

The eWpG provides for two types of register (section 4(1) eWpG): central registers under section 12 eWpG and crypto securities registers under section 16 eWpG. A crypto securities register must be kept on a tamper-proof recording system in which data are logged in chronological order and protected against unauthorised deletion and subsequent alteration (section 16(1) eWpG). A security entered there is called a crypto security (section 4(3) eWpG). Crypto securities are generally transferable securities and therefore financial instruments; in that case MiCAR does not apply (Art. 2(4)(a) MiCAR).

What are the 7 steps of the issuance?

The following process corresponds to the seven steps in which heartstocks implements digital issuances. Statutory deadlines are given with their provision; the remaining periods depend on the project and add up to a total of around 6 weeks (standard) or around 3 months (issuances requiring a prospectus or KAGB structures with special terms).

Step	Content	Timing
1. Initial meeting and product selection	Financing goal, volume, target group; choice of security (e.g. fixed-rate bond, bonus-interest bond) and structure (direct issuance or SPV)	project-dependent
2. Structuring	Terms (interest, maturity, ranking, termination), review of prospectus requirement or exemption, roles of parties	project-dependent
3. Documentation	Bond terms and terms of issue, subscription documents (subscription form, risk disclosures and where applicable corporate documents; depending on the offer, WIB or prospectus)	depends heavily on complete documents
4. Regulatory filing	Filing or approval of the subscription documents with BaFin; heartstocks steers the regulatory dialogue	Subscription documents; where a WIB is required, BaFin decides on permission within 10 working days of receipt (section 4(2) WpPG); prospectus: 10 working days per submission, 20 working days only for the first submission of a first-time issuer (Art. 20(2), (3) Prospectus Regulation)
5. Technical implementation	Deposit of terms with the registrar, token in the register, custody, subscription journey with KYC	Entry no later than 3 months after deposit; otherwise the registrar deletes the deposited terms of issue (section 5(1) sentence 3 eWpG)
6. Go-live and subscription period	Publication of subscription documents, subscription, payment by SEPA in euros, registration of investors	Publish WIB at least one business day before the offer (section 5(3) WpPG)
7. Ongoing administration	Interest and redemption payments, reporting, investor dashboard, updating subscription documents	over the entire term
Total	simple bond with standard structure or issuance requiring a prospectus or KAGB structure with special terms	around 6 weeks or around 3 months

More at heartstocks: Seven-step project process

Who is involved in a digital bond?

Issuer: owes interest and redemption, appoints the registrar and deposits the terms of issue (sections 5, 16(2) eWpG). Where appropriate, a special purpose vehicle (SPV) issues.
Registrar: appointed by the issuer vis-à-vis the holder; without appointment, the issuer itself is deemed the registrar (section 16(2) eWpG). Crypto securities register management is a financial service and generally requires a licence (section 32(1) in conjunction with section 1(1a) sentence 2 no. 8 of the German Banking Act, KWG; exemptions include section 32(1f) KWG).
Crypto custodian: safeguards, for investors, the private cryptographic keys through which the crypto securities are held. This is licensable as qualified crypto custody business (section 32(1) in conjunction with section 1(1a) sentence 2 no. 6(b) KWG).
Payment processing or paying agent: receives subscription amounts and passes interest and redemptions on to investors.
Platform: subscription journey, onboarding with identification, investor dashboard.
Liability umbrella or intermediary: anyone providing investment brokerage in Germany generally needs a licence (section 15(1) of the German Investment Firm Act, WpIG, or section 32(1) KWG) or acts as a tied agent exclusively for the account and under the liability of an institution (investment firm or CRR credit institution; section 3(2) WpIG, section 2(10) KWG).

What is the difference between bond terms and terms of issue?

Under section 2(1) of the German Bond Act (SchVG), bond terms are the conditions describing the performance and the rights and obligations of debtor and creditors. For an electronically issued bond, the bond terms must be accessible at the registrar; amendments by majority resolution of creditors only take effect once accessible there (section 2(2) SchVG).

Under section 4(7) eWpG, terms of issue are the deposited content of the right for which an electronic security is entered, including ancillary provisions. For a digital bond, bond terms and terms of issue are identical in content. The issuer must make them accessible to everyone as a durable electronic document at the registrar before entry (deposit, section 5(1) eWpG). Later amendments only take effect upon renewed deposit (section 5(3) eWpG).

Typical provisions in the bond terms are principal amount and denomination, interest rate and payment dates, term and redemption, termination rights, ranking (e.g. senior or subordinated), paying agent and rules on creditor resolutions under the SchVG.

Which subscription documents does a digital bond need?

The required document depends on volume and target group. Since 5 June 2026, a public offer below EUR 12m per issuer or offeror over 12 months is prospectus-free, provided it is not subject to notification under Art. 25 Prospectus Regulation (Art. 3(2) Prospectus Regulation). In Germany, subject to the exemptions in section 4(1) sentence 2 WpPG, a securities information sheet (WIB) under section 4 WpPG must then be prepared from EUR 100,000, filed with BaFin and published after permission. For electronic securities, the WIB may comprise up to four A4 pages and must name the registrar (section 4(3a) WpPG).

From EUR 12m per issuer or offeror over 12 months: prospectus approved by the competent authority of the home Member State, in Germany BaFin (Art. 3(1) Prospectus Regulation), unless an exemption under Art. 1(4) Prospectus Regulation applies. Admission to trading on a regulated market requires a prospectus irrespective of volume (Art. 3(3) Prospectus Regulation).
Below EUR 12m and from EUR 100,000 over 12 months: WIB under section 4 WpPG, unless an exemption under section 4(1) sentence 2 WpPG applies (including credit institutions, issuers with shares already admitted to a regulated market, and cases requiring a PRIIPs key information document).
Exemptions without prospectus or WIB: offer only to qualified investors, to fewer than 150 non-qualified persons per Member State, minimum denomination or minimum subscription of EUR 100,000 (Art. 1(4)(a) to (d) Prospectus Regulation).

Which mistakes delay a digital issuance?

Incomplete documentation at kick-off: missing annual accounts, corporate documents or information on use of proceeds delay all subsequent steps. For a WIB, the date on which the last annual accounts were adopted may be no more than 18 months before permission (section 4(2) sentence 2 no. 2 WpPG).
BaFin processing times for prospectuses: the review period runs per submission; every request for changes restarts it with the new submission (Art. 20(4) Prospectus Regulation).
KYC and anti-money laundering checks: identifying the issuer, beneficial owners and investors takes time if evidence is missing.
Wrong threshold calculation: under Art. 3(2c) Prospectus Regulation, the EUR 12m calculation includes all ongoing public offers and those made in the preceding 12 months, across all types and classes of securities. Offers for which a prospectus was published or which fell under an exemption in Art. 1(4) first subparagraph Prospectus Regulation are not counted.
Advertising without mandatory notices: advertising is permitted even before publication but must state that a WIB has been published or is due to be published and where it can be obtained; it must be recognisable as advertising and consistent with the WIB (section 7(1) to (3) WpPG).

How does heartstocks implement a digital bond?

heartstocks GmbH, based in Hamburg, has been active in the market since 2021 and, according to its own figures (as of 2026), has supported more than 15 tokenisation projects and structured more than EUR 200m in volume. heartstocks supports issuers as a B2B partner from structuring to ongoing administration. The subscription documents are submitted to BaFin for filing or approval, and heartstocks steers the regulatory dialogue. The tokens are issued in the Nyala register and held in custody via Tangany.

The asset to be financed does not have to exist at the outset. Typical structures are sale-and-leaseback, where the asset is financed from the issuance proceeds and then leased back, project finance prior to completion, where the issuance itself carries construction, and growth finance without an existing asset base.

Investors subscribe digitally with video identification and pay by SEPA in euros, without their own wallet; they see their holding in the investor dashboard. Distribution to investors is managed by the issuer. heartstocks supports placement and investor access with reporting and closing, and issuers see pipeline and subscription status in real time. Banks, asset managers and distribution partners can be involved as tipsters or distribution partners.

For investors, a digital bond involves risks: issuer risk up to total loss, limited tradability and therefore liquidity risk. This article provides general information and does not replace legal or investment advice.

More at heartstocks: Security types and process for issuers How investors subscribe Models for tipsters and distribution partners

Frequently asked questions

How long does it take to issue a digital bond?

At heartstocks, a simple digital bond with subscription documents and a standard structure takes around 6 weeks, provided the client documentation is complete at kick-off. Issuances requiring a prospectus or KAGB structures with special terms take around 3 months. Delays can be caused by incomplete documents, BaFin processing times for prospectuses and KYC/AML checks.

Does a digital bond need a prospectus?

A prospectus is required for a public offer of EUR 12m or more per issuer or offeror over 12 months (Art. 3 Prospectus Regulation, since 5 June 2026), and for admission to trading on a regulated market irrespective of volume (Art. 3(3) Prospectus Regulation). Below the threshold, a securities information sheet under section 4 WpPG is generally mandatory in Germany from EUR 100,000, unless an exemption under section 4(1) sentence 2 WpPG applies. Offers only to qualified investors or with a minimum denomination of EUR 100,000 need neither a prospectus nor a WIB.

Who may operate a crypto securities register?

The registrar is whoever the issuer appoints vis-à-vis the holder, otherwise the issuer itself (section 16(2) eWpG). Crypto securities register management generally requires a licence (section 32(1) in conjunction with section 1(1a) sentence 2 no. 8 KWG; exemptions include section 32(1f) KWG). In practice, issuers therefore appoint a licensed registrar; for issuances with heartstocks, the tokens are issued in the Nyala register.

Do investors need a crypto wallet?

Not with heartstocks. Investors are identified digitally by video identification, pay by SEPA in euros and need neither a wallet nor crypto knowledge. Their holding is entered in the eWpG register and visible in the investor dashboard; custody is provided by licensed crypto custodians with a BaFin licence.

Does the asset have to exist already to issue a digital bond?

No. A digital bond can also finance an asset that does not yet exist, for example as project finance prior to completion. Other typical structures are sale-and-leaseback and growth finance without an existing asset base. heartstocks clarifies the appropriate structure with the issuer in the first call.