Most guides on this topic are written for crypto investors and US token projects. This one is for SMEs, property developers, energy projects and cooperatives in the EU that already have customers or a network and want to raise money from them. It explains in plain language which token fits your raise, what the rules ask of you, and when you do not need a token at all.

The token rules (MiCA) and the core securities rules are EU-wide. Where national rules matter, such as the threshold for a prospectus or who keeps the register of digital securities, we use Germany as the example. The same logic applies in other European countries, with their own national details.

What is a security token?

A security token is an investment in digital form: a security recorded on a blockchain. The holder has lent you money or bought a stake, so they expect interest, repayment or a share of profit. This is the finance meaning of the term, not the hardware token used for secure logins.

What is a utility token?

A utility token is a digital voucher: it gives access to an app, a service or a discount from the company that issued it. It works like a gift card, and nobody buys a gift card expecting the shop to pay them interest.

What is the difference between a security token and a utility token?

A token is an entry on a blockchain, a digital register that records who holds what. The difference lies in the promise behind it: a security token carries a financial promise, a utility token a product promise. If you want to raise money and pay interest on it, you are making a financial promise, so you need a security token.

Can my company raise money with a utility token?

Rarely. A software company can pre-sell access to a platform it launches next year. A property developer or a solar park has nothing comparable to sell, because its investors want a return, not a voucher.

Even then the rules are tight. Utility tokens fall under MiCA, the EU's rulebook for crypto-assets, supervised by the national regulator (BaFin in Germany). A token for a product that does not exist yet usually needs a disclosure document, the crypto-asset white paper, which you must notify to the regulator in advance. There are exemptions, for example for small offers of up to €1 million in 12 months and for tokens for a product that already exists.

The bigger trap is the label. Since May 2025, guidelines from ESMA, the EU's securities markets authority, tell regulators to judge what a token does rather than what the issuer calls it. A "utility token" that pays interest or shares revenue will usually be treated as a security. If that surfaces after the sale, you have sold without the documents securities law requires, which can lead to fines and claims from investors. Our comparison of MiCA and national securities rules goes deeper.

What does a security token look like when a company raises money?

For most companies, a security token is simply a bond in digital form. Investors lend you money, you pay interest and repay at the end of the term, exactly as with a classic bond issued without a bank. Siemens showed the model works in 2023, when it issued a €60 million digital bond on the public Polygon blockchain with no paper certificate, placed with institutional investors.

Ownership sits in a digital securities register instead of a bank's securities account. How that register works depends on the country. In Germany, a digital bond is a crypto security under the Electronic Securities Act (eWpG), and the register is kept by a registrar licensed by BaFin; the licence sits with that partner, not with ONINO. According to BaFin's database, seven companies held this licence in July 2026. Check tax early as well: in Germany, without a designated withholding agent, the issuer itself is responsible for withholding capital gains tax on the interest. Our explainer on digital securities covers how these registers work.

A prospectus is the long legal document the regulator must approve before a company offers securities to the public above a certain size. Under the EU prospectus rules, each country exempts offers below either €12 million or €5 million in 12 months, counted across everything the company offers. Germany chose €12 million from June 2026: from an offer of €100,000, a short securities information sheet (WIB) is enough, at most four pages for crypto securities, approved by BaFin within ten working days. Since February 2026, German companies may also sell the bond themselves, without a bank and without caps per investor. Other countries ask for their own short document. Plan roughly two to four months of preparation for a first raise. Our 5-step guide to a self-issuance walks through the process, and our guide to how a security token offering works in the EU covers the token side.

Security token vs utility token at a glance

Will a security token look like crypto to my investors?

It does not have to. Your investors sign up on your own investment page, verify their identity online and pay by bank transfer. They see their bond, with interest dates and payments, in their investor account. Usually a licensed custody partner holds the keys for them, so they never need their own crypto wallet.

Investors can generally transfer a digital bond. For SME bonds, however, there is usually no trading venue with many buyers, so do not promise that the bond can be sold easily.

Do I need a token at all?

No. A token is one way to record and manage an investment, not the investment itself. The same €5 million raise could run as a classic bond or a digital bond, and both give investors the same rights; only the record changes.

A subordinated loan or profit-participation rights are different instruments: investors are paid only after your other creditors, and they are not securities, so national rules apply. In Germany, for example, a public offer of these products to retail investors is only possible through a licensed intermediary and with an investor document; only very small offers are exempt, such as up to 20 units or up to €100,000 in 12 months. They also cannot be issued as crypto securities, but a cooperative can issue a bond. Other EU countries have their own rules, often similarly strict.

A digital bond earns its place in the admin: interest payments, the investor list and transfers run digitally instead of through spreadsheets, which matters most with hundreds of investors or a raise every year. For a one-off loan from five family investors, a simple subordinated loan agreement is often enough, as our comparison of subordinated loans and tokenized bonds shows.

How do I choose the right route for my raise?

Three questions settle most cases:

1. Do your investors expect money back or a return? Then you need an investment instrument such as a bond, never a utility token.

2. How much are you raising, and from whom? Below your country's prospectus limit (€12 million in Germany), a short information sheet is usually enough. Offers only to professional investors such as funds and insurers, to fewer than 150 retail investors per country, or with at least €100,000 per investor need neither a prospectus nor an information sheet, anywhere in the EU.

3. Will you raise again, from many smaller investors? Then a digital register and automated interest payments save time with every round.

Raising directly from your own customers, members and network is called self-issuance, or direct placement. ONINO is a software provider: its white-label platform for direct placements lets you run that raise under your own brand, as a digital bond, a classic bond or, through a licensed intermediary, a subordinated loan. You bring the deal and the investors; registrar, custody and payment functions run through pre-integrated licensed partners. If you want to check whether it fits your raise, talk to our team.

Frequently asked questions

What is an example of a security token? A digital bond, such as the €60 million bond Siemens issued on a public blockchain in 2023 and placed with institutional investors. For an SME, it is usually a bond paying fixed interest to its own customers or network.

Can a cooperative issue a security token? Yes, as a bond. In Germany, cooperative member shares cannot be issued as crypto securities, but a bond issued by the cooperative can.

Is Ethereum a utility token? No, not in the MiCA sense. A utility token gives access to a product of its issuer, and Ether has no issuer. Under MiCA, Ether counts as an "other crypto-asset", not a security, because it gives no claim on any company's profits or repayment.

Can a utility token become a security token? Yes. If it starts paying interest or sharing revenue, regulators can treat it as a security, whatever it is called.

So which token should your company use?

If investors expect a return, you are offering an investment, so structure it as one from day one: for most companies a bond, classic or digital. Agree the structure with your lawyer first, then choose the platform you run it on.

Legal status: October 2026. Sources: MiCA, Regulation (EU) 2023/1114, Art. 3, 4, 6, 8 and 13; ESMA guidelines on the qualification of crypto-assets as financial instruments (March 2025); Prospectus Regulation (EU) 2017/1129 as amended by the EU Listing Act. German examples: Standortfördergesetz (StoFöG), BGBl. 2026 I No. 33; Wertpapierprospektgesetz; Gesetz über elektronische Wertpapiere (eWpG); Vermögensanlagengesetz, § 2(1) No. 3 and § 5b.

This article is general information, not legal, tax or investment advice.