Tokenised Genussschein: Security or Investment Product?

Short answer

A profit participation certificate (Genussschein) is a securitised profit participation right and qualifies as a security if it is transferable and negotiable on the financial market; section 2(1) no. 3(a) of the German Securities Trading Act (WpHG) expressly lists Genussscheine as debt securities. If the certificate is structured as a bearer bond, it can be issued as an electronic security, for example as a crypto security, under section 1 no. 1 eWpG. A profit participation right not securitised in a security, by contrast, is an investment product (Vermögensanlage) under section 1(2) no. 5 of the German Capital Investment Act (VermAnlG); for a public offer in Germany the VermAnlG generally applies, while as a token without security status it may be a crypto-asset under MiCAR, in which case the VermAnlG does not apply (section 1(1) sentence 3 VermAnlG).

At a glance

Transferable Genussscheine negotiable on the financial market are securities within the meaning of the WpHG (section 2(1) no. 3(a) WpHG), even without a certificate.
Profit participation rights are investment products only if not securitised in securities within the meaning of the WpPG (section 1(2) no. 5 VermAnlG).
Bearer bonds are eligible under the eWpG (section 1 no. 1 eWpG); a Genussschein must therefore be structured as a bearer bond.
A stock corporation may grant profit participation rights only on the basis of a resolution of the general meeting (section 221(3) in conjunction with (1) AktG).

What is a Genussschein?

A profit participation right (Genussrecht) is a contractual claim against a company that typically grants a share in profits but no membership rights such as voting rights. The law does not define the profit participation right; the German Stock Corporation Act (AktG) mentions it in section 221(3) AktG and declares the rule on the resolution of the general meeting for convertible and profit-sharing bonds (section 221(1) AktG) applicable mutatis mutandis to the granting of such rights by a stock corporation. The specific design follows from the terms and conditions.

A Genussschein is a profit participation right securitised in a security. Section 2(1) no. 3(a) WpHG expressly classifies Genussscheine as debt securities and thus as securities, even if no certificates have been issued. The prerequisite is that they are transferable and, by their nature, negotiable on the financial markets.

When is a profit participation right a security and when an investment product?

The distinction follows from section 1(2) VermAnlG. Under it, profit participation rights (no. 5) are investment products only if they are not securitised in securities within the meaning of the WpPG and not structured as units in investment undertakings (Investmentvermögen) under section 1(1) of the German Investment Code (KAGB). Securities within the meaning of the WpPG are, under section 2(1) no. 1 WpPG, transferable securities within the meaning of Art. 2(a) Prospectus Regulation, which refers to Art. 4(1)(44) MiFID II. The decisive question is therefore whether the profit participation right is designed as a transferable security negotiable on the capital market.

Feature	Genussschein as a security	Genussrecht as an investment product
Legal basis	WpPG and Prospectus Regulation, WpHG; eWpG for electronic issuance	VermAnlG for a public offer in Germany; the VermAnlG does not apply to a MiCAR crypto-asset (section 1(1) sentence 3 VermAnlG)
Securitisation	certificate or entry in an electronic securities register	no securitisation as a security
Offering document	prospectus from EUR 12m per issuer or offeror over 12 months (without notification under Art. 25 Prospectus Regulation); below that generally WIB from EUR 100,000, unless a PRIIPs key information document is required (Art. 3 Prospectus Regulation, section 4 WpPG)	sales prospectus and investment product information sheet (VIB), only a VIB under the exemptions in sections 2a, 2b VermAnlG; no VIB is required where a PRIIPs key information document must be published (section 13(1) VermAnlG)
Transferability	transferable, capital-market-eligible; for crypto securities transfer in the register	contractual assignment, limited tradability
MiCAR	generally not applicable: as a transferable security it is a financial instrument (Art. 2(4)(a) MiCAR)	as a token possibly a MiCAR crypto-asset (not a financial instrument within the meaning of MiFID II); the VermAnlG then does not apply (section 1(1) sentence 3 VermAnlG)

Can a Genussschein be issued as a crypto security?

Under section 1 eWpG, the Act applies to bearer bonds, registered shares and bearer shares in a central register. A Genussschein structured as a bearer bond within the meaning of section 793 BGB falls under section 1 no. 1 eWpG and can therefore be issued as an electronic security. To do so, the issuer effects an entry in an electronic securities register under section 2(1) eWpG instead of issuing a certificate. Entry in a crypto securities register under section 16 eWpG creates a crypto security (section 4(3) eWpG).

A Genussschein issued in registered form is not covered by the wording of section 1 eWpG. Whether a specific profit participation right can be securitised as a bearer bond depends on its terms and is determined during structuring. The WIB for an electronic security requires additional information on technology, transferability and the registrar, with a limit of four A4 pages (section 4(3a) WpPG).

How is a Genussschein typically structured?

Profit participation: remuneration can be profit-dependent, fixed subject to sufficient profit, or a combination of base and bonus components.
Loss participation: the terms may provide that the redemption claim participates in the issuer's losses.
Subordination: if subordination is agreed, the claims are, in case of doubt, satisfied in insolvency only after the other subordinated claims listed in section 39(1) of the German Insolvency Code (§ 39(2) InsO).
Term and termination: fixed term or perpetual with termination rights. The German Bond Act (SchVG) applies to identical bonds from collective issues governed by German law (section 1(1) SchVG); majority resolutions of creditors are only possible if the bond terms provide for them (section 5(1) SchVG).
Corporate law: a stock corporation requires a resolution of the general meeting covering at least three quarters of the share capital represented at the vote, unless the articles of association provide for a different capital majority; shareholders generally have a subscription right (section 221(1), (3) and (4) AktG).

When is a tokenised Genussschein suitable and what are its risks?

A Genussschein suits issuers who want to offer investors a share in economic success without granting shareholder rights such as voting rights. Typical use cases are growth financing, project companies for example in energy or mobility, and structures where a fixed interest rate alone does not fit the business model. As a tokenised security, the Genussschein can be subscribed digitally, managed in the register and transferred to investors.

For investors, a Genussschein is a high-risk product. With profit and loss participation, distributions may be omitted and the redemption amount may fall. If subordination is agreed, investors are served only after the other creditors in insolvency. There is issuer risk up to total loss. If there is no exchange or secondary market trading, a sale before maturity may be difficult (liquidity risk). Every WIB must also contain the warning that the acquisition may lead to total loss of the capital invested (section 4(4) WpPG).

How does heartstocks implement a tokenised Genussschein?

The Genussschein is one of the types of security that heartstocks structures as digital securities, alongside fixed-rate bonds, bonus-interest bonds, preference shares and ordinary shares. heartstocks GmbH has been active in the market since 2021; according to its own figures (as of 2026), it has supported more than 15 tokenisation projects and structured more than EUR 200m in volume. The specific design is determined during structuring; heartstocks clarifies the type of security and legal form with the issuer in the first call, as well as whether issuance is direct or via a special purpose vehicle (SPV).

An alternative to the Genussschein is the bonus-interest bond: a bond with a base coupon plus a performance-linked bonus. It lets investors share in business success without the issuer giving up equity, and the base coupon remains predictable.

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. Investors subscribe digitally and pay by SEPA in euros, without their own wallet.

This article provides general information and does not replace legal or investment advice.

More at heartstocks: heartstocks security types at a glance Issuing a digital bond

Frequently asked questions

Is a Genussschein a security?

Yes, if it is transferable and negotiable on the financial market. Section 2(1) no. 3(a) WpHG expressly lists Genussscheine as debt securities and therefore as securities, even without a certificate. Public offers are then governed by the Prospectus Regulation and the WpPG.

When is a profit participation right an investment product?

Under section 1(2) no. 5 VermAnlG, a profit participation right is an investment product if it is not securitised in a security within the meaning of the WpPG and not structured as a unit in an investment undertaking (Investmentvermögen). For a public offer in Germany, sales prospectus and VIB obligations under the VermAnlG then generally apply. If the right is issued as a token without security status and qualifies as a crypto-asset under MiCAR, the VermAnlG does not apply (section 1(1) sentence 3 VermAnlG).

Can a Genussschein be tokenised under the eWpG?

Yes, if it is structured as a bearer bond, because under section 1 no. 1 eWpG the Act applies to bearer bonds. The Genussschein is then issued by entry in an electronic securities register, as a crypto security in a crypto securities register. Section 1 eWpG does not cover registered Genussscheine.

What risks does a Genussschein pose for investors?

Distributions usually depend on profits and may be omitted; with loss participation, the redemption amount also falls. With subordination, investors are served in insolvency only after other creditors (section 39(2) InsO). There is issuer risk up to total loss and liquidity risk.

What is an alternative to a Genussschein?

One alternative is the bonus-interest bond, a bond with a base coupon plus a performance-linked bonus. It lets investors share in business success without equity being given up. The appropriate type of security is determined during structuring; at heartstocks, the issuer and heartstocks clarify the type of security and legal form in the first call.