Digital Debt Instruments: From Nachrangdarlehen to Genussrechte on a Platform

German mezzanine financing instruments have been staples of SME capital structures for decades. Nachrangdarlehen, Genussrechte, and Wandeldarlehen are well-understood by corporate treasurers, regional banks, and structured finance practitioners. What is less understood is what happens when these instruments are issued in digital form on a regulated platform, what changes operationally, and what the compliance path looks like for issuances below the prospectus threshold.

The Three German Debt Instruments and Their Digital Form

A Nachrangdarlehen (subordinated loan) is a debt instrument in which the lender's claim ranks behind senior creditors in the event of insolvency. In digital form, it is structured as a debt token that encodes the subordination clause, the interest payment schedule, and the maturity terms directly in the smart contract.

A Genussrecht (profit participation right) confers an economic interest in the issuer's profits without granting formal equity ownership or voting rights. In digital form, a Genussrecht token automates profit participation payment distribution based on audited financial data fed into the smart contract, removing the manual reconciliation process that characterizes traditional Genussrecht administration.

A Wandeldarlehen (convertible loan) converts into equity upon defined trigger events. In digital form, the conversion mechanism is encoded as a smart contract condition: when the trigger is confirmed, the debt token is burned and equity tokens are issued at the predefined conversion terms.

What Digitization Actually Changes for Each Instrument

The legal rights attached to each instrument do not change when issued digitally. What changes is the operational layer.

For Nachrangdarlehen, the primary benefit is distribution reach. A traditional subordinated loan requires bilateral negotiation per investor. A digital Nachrangdarlehen allows multiple investors to subscribe through a standardized onboarding process, with the smart contract managing interest payments automatically.

For Genussrechte, digitization addresses the servicing complexity that has historically limited their use. A digital Genussrecht connects the issuer's accounting system to the investor registry directly: when profit figures are confirmed, the distribution executes automatically across all token holders.

For Wandeldarlehen, the conversion mechanism is where digitization adds the most structural value. A smart contract-based conversion executes the token exchange automatically when trigger conditions are met, generating an on-chain record available to all parties, including future investors in due diligence.

Regulatory Classification and Compliance Requirements

Nachrangdarlehen structured as Vermögensanlagen are regulated under the VermAnlG. Those incorporating transferable token mechanics may cross into securities territory under MiFID II depending on transferability and distribution breadth.

Genussrechte are generally classified as securities under German law when transferable and publicly offered, bringing them within the EU Prospectus Regulation, the eWpG register requirement, and MiFID II platform authorization. For offers between EUR 1 million and EUR 8 million, a simplified information document satisfies the disclosure obligation.

Wandeldarlehen sit at the intersection of debt and equity regulation. The debt component falls under the Vermögensanlagen framework until conversion, at which point equity securities rules apply.

How the Issuance Process Works on a Platform

The issuance sequence follows the same seven-step framework: legal structuring, offering documentation, platform configuration, investor onboarding, offering period, token issuance and register entry, and post-issuance management.

For DACH-market instruments, the legal structuring phase must determine whether the instrument falls under VermAnlG, the Wertpapierprospektgesetz, or the eWpG regime. Instruments qualifying as electronic securities under eWpG must be entered in a BaFin-supervised crypto securities register.

For Sparkassen and regional banks, the platform provides a white-label environment in which the bank's clients interact under the bank's brand while ONINO operates the underlying compliance and technical infrastructure. This model has been validated through the Volksbank partnership.

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FAQ

What is a Nachrangdarlehen and how does it differ from a standard loan?

A Nachrangdarlehen is a subordinated loan where the lender's repayment claim ranks behind all senior creditors in insolvency. In exchange for this subordinated position, investors receive a higher interest rate. It functions as mezzanine capital, strengthening the equity base for senior lenders without formal equity dilution.

Are digital Genussrechte classified as securities under German law?

Generally yes, when transferable and publicly offered. Non-transferable Genussrechte offered to a small group may fall outside the securities classification, but legal advice is required for each instrument structure.

How does a digital Wandeldarlehen conversion work in practice?

When the trigger conditions are confirmed, the smart contract automatically burns the debt tokens and issues equity tokens at the predefined conversion terms. The on-chain record is immediately visible to all parties and creates an auditable trail for cap table purposes.

Do regional banks need their own platform license to offer digital debt instruments?

Not when operating through a licensed infrastructure provider. The bank acts as distributor; the platform carries the technical and compliance authorization. The partnership structure must clearly delineate each party's regulatory role.

Summary

• Nachrangdarlehen, Genussrechte, and Wandeldarlehen can all be issued in digital form on a regulated platform

• Digitization does not change instrument holders' legal rights; it changes the operational layer for issuance, servicing, and transfer

• Transferable instruments offered publicly typically fall under MiFID II and the EU Prospectus Regulation

• Instruments qualifying as electronic securities under eWpG must be entered in a BaFin-supervised crypto securities register

• Regional banks can offer digital debt instruments to SME clients through a licensed platform partner without their own issuance authorization