Token or equity: when a token stake actually fits

We name four routes through which an investment with us can come about: cash, Knowledge & Work for Equity, a convertible loan, and tokens. The fourth sits deliberately at the end, and it is the narrowest door of them all. Not because crypto is foreign to us, but because through Cryptoticker we have watched for years how many token projects disappear after the listing.

So when a team tells us it wants to "represent the stake through a token", we start with three sober questions. They are not meant as a hurdle but as a shortcut: anyone who can answer them saves months of lawyer time.

First: a token is almost never your company share

The most widespread error is the idea that a token can replace shares in a German GmbH. It cannot. Under Section 15(3) of the German Limited Liability Companies Act (GmbHG), transferring shares in a GmbH requires an agreement concluded in notarial form. A token whose entire purpose is free transferability cannot satisfy that form. Every transfer would have to go through a notary, which makes the token pointless as a transfer mechanism.

The electronic route does not help either. Germany's Act on Electronic Securities lists exactly three categories in Section 1 eWpG: bearer bonds, registered shares, and bearer shares where entered in a central register. GmbH shares are not among them. A tokenised share in a German stock corporation is possible. A tokenised GmbH share is not.

Anyone offering to tokenise GmbH shares either meant a stock corporation or has not read the statute.

This is the same reasoning about legal form that shapes our Knowledge for Equity model: not every economically sensible idea can be poured directly into shares. You need the right contract alongside it. How we solved that there is described in Knowledge for Equity.

Second: the moment your token behaves like equity, MiCA does not apply

Many teams count on the lighter regime. The European crypto-asset regulation, Regulation (EU) 2023/1114 of 31 May 2023, known as MiCA, requires for crypto-assets other than asset-referenced and e-money tokens a white paper that is notified to the competent authority and published. That is considerably less work than a securities prospectus.

The catch is in the regulation itself: crypto-assets that qualify as financial instruments within the meaning of Directive 2014/65/EU are excluded from MiCA. They remain under existing financial markets law, following the principle of same activity, same risk, same rules. If your token economically embodies a share of profits, a share of revenue, or a shareholder-like position, it is quite likely exactly that: a financial instrument. In which case you are not in the light MiCA procedure but in securities law, and the token has saved you nothing at all.

One more thing deserves saying, because sales decks like to blur it: a white paper notified to an authority is not an approval. The European Securities and Markets Authority states explicitly in its register that the white papers listed there have not been reviewed or approved by any competent authority and remain the sole responsibility of the issuer. "MiCA registered" is not a seal of quality.

Third: the deadline for "we will sort that out later" has passed

The part teams underestimate most is not issuing the token but operating afterwards. Anyone offering trading, exchange or custody is providing a crypto-asset service and needs authorisation as a crypto-asset service provider. The MiCA requirements for that have applied since 30 December 2024.

Germany deliberately made the transitional phase shorter than it had to be. Section 50 of the German Crypto Markets Supervision Act (KMAG) allowed providers lawfully active on 29 December 2024 to continue at the latest until the end of 31 December 2025. MiCA would have permitted member states a period until 1 July 2026; the German legislator cut half a year from it. Anyone still planning in 2026 to address the licensing question "after launch" is planning around a deadline that has already expired.

When we do say yes to a token

After all those objections, the counter-question: when is a token the right answer? Our rule is simple and has a single test. The token must perform a function in the product that would be missing without it.

That is the case when a network has to coordinate participants who do not know each other and trust no common operator. When compute, storage, data or reach is supplied and settled by many unknown parties. When access has to be programmable because a contract would be too slow. In those cases the token is not a financing instrument but infrastructure, and then it is strong.

The reverse is just as clear. When the token has no job in the product and the deck mostly explains how many of them go to investors, it is a financing instrument in costume.

A token that only raises money is an expensive convertible loan with added price risk.

In those cases we actively recommend the third route: a convertible loan. It is faster, cheaper, legally settled, and it dilutes nobody at a price set by a volatile market. Which of the four routes fits your situation is something we decide together in the weekly review described in How our investment committee decides.

Why we trust ourselves on this

We do not assess this field from the literature. Cryptoticker is one of the larger German-language publications on crypto and digital assets, and we have seen both sides there for years: the projects that build a user base after the listing, and the many where the token was the product. That experience is why tokens are a route with us rather than a promise.

If your token has a real function, we will listen gladly, and you will notice that we ask the right questions. Send us your model.

Note: this article is an entrepreneurial assessment, not legal, tax or investment advice, and not a recommendation to buy. The provisions cited reflect the legal position as at 7 August 2026. Classifying a specific token always belongs with a lawyer and a regulatory specialist.