Tokenising a special AIF: crypto fund units or an InvAG?

Short answer

There are two routes for tokenising a special AIF. Units in a special AIF can be issued as crypto fund units under the Crypto Fund Units Ordinance (KryptoFAV) if the AIF is set up as an (open-ended) Sondervermögen (contractual investment fund): § 95(1) of the German Investment Code (KAGB) permits electronic unit certificates, and under § 1 KryptoFAV these can be entered in a crypto securities register, which under § 3 KryptoFAV is kept by the depositary or by a licensed firm mandated by it. A registered AIF management company (KVG), by contrast, may not manage a Sondervermögen (§ 44(1) sentence 1 no. 7 KAGB); its special AIF is set up in a corporate form such as an investment stock corporation (InvAG) or an investment limited partnership (InvKG) structured accordingly, and the digital issuance is determined during structuring. Under § 1(6) KAGB, special AIFs are open only to professional and semi-professional investors; semi-professional investors include anyone who commits to invest at least EUR 200,000 and meets the further conditions of § 1(19) no. 33(a) KAGB.

At a glance

Special AIF: units may only be acquired by professional and semi-professional investors (§ 1(6) KAGB).
Electronic unit certificates of a Sondervermögen are bearer instruments (§ 95(1) KAGB).
KryptoFAV of 3 June 2022, in force since 18 June 2022, last amended by Article 13 of the Fund Risk Limitation Act (Fondsrisikobegrenzungsgesetz) of 9 April 2026 (BGBl. 2026 I No. 97) with effect from 16 April 2026.
Register keeper for crypto fund units: the depositary or a firm mandated by it with a licence under the KWG or WpIG (§ 3 KryptoFAV).
Registered AIF management companies may only manage AIFs in the legal form of a legal entity or certain commercial partnerships, and therefore no Sondervermögen (§ 44(1) sentence 1 no. 7 KAGB).
Route for registered KVGs: a special AIF in corporate form, for example as an InvAG (§ 1(11), § 108 KAGB); the digital issuance is determined during structuring.

What is a special AIF?

Under § 1(6) KAGB, a special AIF is an alternative investment fund (AIF) whose units may only be acquired by professional and semi-professional investors, based on agreements with the management company concluded in text form or on the constituting documents of the AIF. All other investment funds are retail investment funds. Under § 1(3) KAGB, an AIF is any investment fund that is not a UCITS.

Under § 1(19) no. 32 KAGB, a professional investor is any investor who is considered a professional client under Annex II of Directive 2014/65/EU (MiFID II) or who may be treated as one on request. Under § 1(19) no. 33 KAGB, a semi-professional investor is, among others, anyone who commits to invest at least EUR 200,000, declares in a separate document in text form that they are aware of the risks, and whose expertise has been assessed and confirmed in text form by the management company or its distributor.

Investor category	Legal basis	Access to a special AIF
Professional investor	§ 1(19) no. 32 KAGB with Annex II MiFID II	Yes
Semi-professional investor (from EUR 200,000 with assessment)	§ 1(19) no. 33(a) KAGB	Yes
Semi-professional investor (from EUR 10 million)	§ 1(19) no. 33(c) KAGB	Yes
Retail investor	§ 1(19) no. 31 KAGB	No

What does § 95 KAGB say about electronic unit certificates?

Under § 95(1) KAGB, units in a Sondervermögen are either certificated or issued as electronic unit certificates. Unit certificates may be in bearer form or, unless issued electronically, in registered form. Electronic unit certificates are therefore always bearer certificates. The option of electronic unit certificates was created by the Act introducing electronic securities of 3 June 2021.

§ 95(3) KAGB declares key provisions of the Electronic Securities Act (eWpG) applicable mutatis mutandis to electronic unit certificates, including §§ 9 to 15 eWpG except § 13(1) nos. 2 and 3; these also cover the rules on the central register (§§ 12 to 15 eWpG). The electronic unit certificate takes the place of the electronic security, the investment terms take the place of the terms of issue, and the investor takes the place of the entitled person. The Fund Risk Limitation Act of 9 April 2026 only adjusted the cross-reference to the eWpG in § 95(3) sentence 1 KAGB (“§§ 6 to 8” instead of “§§ 6 to 8(1)”).

§ 95(5) KAGB empowers the Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection to extend, by joint ordinance, among other things the eWpG provisions on crypto securities registers (§§ 16 to 23 eWpG) to electronic unit certificates, and in particular to provide for deviations regarding the depositary. The Crypto Fund Units Ordinance (KryptoFAV) was adopted on this basis.

What does the KryptoFAV regulate?

The Crypto Fund Units Ordinance (KryptoFAV) of 3 June 2022 has applied since 18 June 2022. Under § 1 KryptoFAV, units in a Sondervermögen or in individual unit classes of a Sondervermögen may be issued wholly or partly as crypto fund units. Crypto fund units are electronic unit certificates entered in a crypto securities register. A Sondervermögen can therefore run conventional and tokenised unit classes side by side.

§ 2 KryptoFAV declares § 4(11), § 8, §§ 16 to 23 (except § 17(1) nos. 2 and 3) and §§ 30 and 31(1) and (2) nos. 13 to 15 eWpG applicable mutatis mutandis. As a result, the requirements for a tamper-proof recording system (§ 16(1) eWpG) and for register entries (§ 17 eWpG) also apply to crypto fund units. § 2 KryptoFAV was also amended by Article 13 of the Fund Risk Limitation Act; since then it refers to the whole of § 8 eWpG.

§ 3 KryptoFAV deviates from § 16(2) eWpG: for crypto securities the issuer appoints the register keeper, whereas for crypto fund units it is the depositary or a firm mandated by it. The mandated firm must hold a licence for crypto securities register management under § 1(1a) sentence 2 no. 8 in conjunction with § 32(1) sentence 1 of the German Banking Act (KWG), or under § 2(4) no. 4 in conjunction with § 15(1) of the Investment Firm Act (WpIG). The WpIG alternative was inserted by Article 13 of the Fund Risk Limitation Act with effect from 16 April 2026. If the depositary mandates another firm, it must ensure that it can continue to meet its depositary duties under the KAGB.

Since 16 April 2026, § 139 KAGB also allows closed-ended domestic investment funds to be set up as a Sondervermögen. Under the transitional provision in § 366(3) KAGB, § 95 KAGB, and with it the route to electronic unit certificates, only applies to these closed-ended Sondervermögen from 16 April 2028.

What are the roles of the management company, the depositary and the register keeper?

Three functions work together for crypto fund units: the management company (KVG) manages the investment fund, the depositary provides safekeeping and oversight, and the register keeper maintains the crypto securities register. Under § 17(1) KAGB, management means at least portfolio management or risk management.

Role	Task for crypto fund units	Legal basis
Management company (KVG)	Managing the Sondervermögen, investment terms, issuing units	§§ 17, 20, 95 KAGB
Depositary	Safekeeping and oversight, in particular oversight of issue and redemption (§ 83(1) no. 1 KAGB); register keeper unless it mandates another firm	§§ 80 et seq., § 83(1) no. 1 KAGB, § 3 KryptoFAV
Mandated register keeper	Keeping the crypto securities register on behalf of the depositary	§ 3 KryptoFAV; § 1(1a) sentence 2 no. 8, § 32(1) KWG or § 15(1) WpIG
Crypto custodian	Safeguarding private cryptographic keys for investors, where applicable	§ 32(1) with § 1(1a) sentence 2 no. 6(b) KWG (qualified crypto custody business)

Registered or licensed management company: which route is open?

Under § 20(1) KAGB, operating a management company generally requires a licence from BaFin, the German financial supervisor. An AIF management company that meets the conditions of § 2(4) sentence 2 KAGB only has to register with BaFin under § 44 KAGB instead. Under § 2(4) sentence 1 KAGB, only certain provisions apply to such a registered AIF management company, in particular §§ 1 to 17, 42 and 44 to 45a KAGB. § 2(5) KAGB has been repealed.

The registered AIF management company manages, directly or indirectly, only special AIFs (§ 2(4) sentence 2 no. 1 KAGB).
Assets under management, including leverage, do not exceed EUR 100 million or, without leverage and without redemption rights within five years, EUR 500 million (§ 2(4) sentence 2 no. 2 KAGB).
BaFin confirms registration within two weeks of receiving the complete application if the conditions are met (§ 44(4) KAGB).
The registered AIF management company may only manage AIFs in the legal form of a legal entity or of a commercial partnership whose general partner is exclusively an AG, a GmbH or a limited partnership whose sole general partner is a GmbH, and in which, in addition, investors are not obliged to make additional contributions (§ 44(1) sentence 1 no. 7 KAGB). Possible forms include an investment stock corporation (InvAG) or an investment limited partnership structured accordingly.

This distinction has practical consequences for tokenisation. The KryptoFAV only applies to units in a Sondervermögen (§ 1 KryptoFAV). A Sondervermögen is an investment fund in contractual form (§ 1(10) KAGB) and therefore, unlike an investment stock corporation or investment limited partnership (§ 1(11) KAGB), neither a legal entity nor a commercial partnership. A registered AIF management company may therefore not manage a Sondervermögen (§ 44(1) sentence 1 no. 7 KAGB); if it manages AIFs in another legal form, BaFin refuses registration (§ 44(4) sentence 2 no. 3 KAGB). Crypto fund units under the KryptoFAV are therefore not available for special AIFs of a registered AIF management company. Such a special AIF is set up in a corporate or partnership form. How its units or shares can be issued digitally depends on the legal form and must be assessed case by case. Under § 108(2) KAGB, the German Stock Corporation Act (AktG) generally applies to an investment stock corporation with variable capital unless the KAGB provides otherwise; § 44(1) sentence 2 KAGB declares § 108 KAGB applicable mutatis mutandis to registered AIF management companies as well. The depositary rules in §§ 80 et seq. KAGB are not among the provisions that § 2(4) KAGB declares applicable to registered AIF management companies.

Feature	Crypto fund unit (Sondervermögen)	Corporate form (InvAG or InvKG)
Management company	licensed KVG (§ 20(1) KAGB); registered AIF management company excluded (§ 44(1) sentence 1 no. 7 KAGB)	licensed KVG or registered AIF management company (§ 44 KAGB)
Legal basis of the digital units	§ 95 KAGB, KryptoFAV	depends on the legal form; for an InvAG with variable capital, generally the Stock Corporation Act (§ 108(2) KAGB); determined during structuring
Register	crypto securities register kept by the depositary or a licensed firm mandated by it (§ 3 KryptoFAV)	determined during structuring
Investor base	professional and semi-professional investors only (§ 1(6) KAGB)	professional and semi-professional investors only (§ 1(6) KAGB)

More at heartstocks: Glossary: registered KVG, InvAG, crypto fund unit

How does tokenising a special AIF work in practice?

Tokenising a special AIF follows the steps of a normal launch, supplemented by register and custody questions. A typical sequence is:

Choose the structure: Sondervermögen with crypto fund units (licensed management company) or a corporate form such as an investment stock corporation (also possible for a registered management company).
Define the investor base: only professional and semi-professional investors under § 1(6) KAGB, with agreements in text form.
Prepare documents: investment terms or articles of association, with provisions on the unit class and the register in the case of crypto fund units.
Settle register management: the depositary itself or a mandated firm with a licence for crypto securities register management (§ 3 KryptoFAV).
Involve the supervisor: licence or registration of the management company and the notifications to BaFin required for the chosen structure.
Onboarding and subscription: verifying investor status, identification under the Anti-Money Laundering Act (GwG), payment and registration of the units.

Investors in special AIFs bear the risks of the investment strategy, up to and including total loss. Units are often only tradable to a limited extent, and redemption rights may be excluded or limited. Tokenisation does not change these economic risks.

How heartstocks supports KAGB structures

For KAGB structures, heartstocks works with a connected registered capital management company (KVG) as a partner. heartstocks contributes structuring, documentation, platform, onboarding and settlement; the first special AIF under the KAGB is being structured through this KVG in 2026. Typical applications are feeder structures and co-investments via deal syndicates and SPVs.

The types of securities heartstocks structures include tokenised units in KAGB structures (AIF or InvAG). Which legal form and which form of digital issuance are suitable for a special AIF is determined during structuring. heartstocks GmbH, based in Hamburg and active in the market since 2021, has according to its own figures (as of 2026) supported more than 15 tokenisation projects and structured more than EUR 200 million in volume.

For KAGB structures with individual special terms, heartstocks expects around three months. Delays can result from incomplete client documentation, BaFin processing times for prospectuses and KYC and AML processes on the investor side. Investors are onboarded digitally with video identification and pay in euros via SEPA, without needing their own wallet.

This article provides general information on the legal situation and does not replace individual legal or investment advice.

More at heartstocks: Security types and process for asset managers FAQ on the KVG partnership

Frequently asked questions

What is a crypto fund unit?

Under § 1 KryptoFAV, a crypto fund unit is an electronic unit certificate of a Sondervermögen that is entered in a crypto securities register. It can be issued for the whole Sondervermögen or only for individual unit classes. The legal basis is § 95 KAGB.

From what amount can I invest in a special AIF?

Retail investors cannot invest in a special AIF. Under § 1(19) no. 33 KAGB, a semi-professional investor includes anyone who commits to invest at least EUR 200,000, provides a risk statement in text form and is assessed accordingly by the management company. Professional investors under MiFID II also have access.

Does the KryptoFAV also apply to a registered management company?

No. The KryptoFAV only concerns units in a Sondervermögen (§ 1 KryptoFAV). Under § 44(1) sentence 1 no. 7 KAGB, a registered AIF management company may only manage AIFs in the legal form of a legal entity or certain commercial partnerships, and therefore not a Sondervermögen. For special AIFs of a registered AIF management company, digital issuance therefore depends on the legal form of the AIF, for example an investment stock corporation, and is determined during structuring.

Does MiCAR apply to crypto fund units?

Under Article 2(4)(a), MiCAR (Regulation (EU) 2023/1114) does not apply to crypto-assets that qualify as financial instruments. Financial instruments within the meaning of MiCAR are those under MiFID II (Article 3(1)(49) MiCAR); they include units in collective investment undertakings (Annex I Section C(3) of Directive 2014/65/EU, in German law § 2(4) no. 2 of the Securities Trading Act, WpHG). Crypto fund units are therefore governed by the KAGB, the KryptoFAV and the eWpG, not by MiCAR.