Regulation & Compliance
The new EU prospectus threshold may simplify some real estate tokenization projects. Three checks still matter: token rights, asset readiness and how the offer is structured.
Imagine owning a building that could be brought back into productive use, but renovating it requires substantial capital. The usual options are three: sell it, seek bank financing, or bring in a partner who will expect an equity stake and a say in the project. Each comes with a cost that many owners would prefer not to pay.
In some cases, tokenization offers a fourth route. It involves using digital tokens to represent specific rights connected with the project. Those rights may range from access to goods or services to, in entirely different structures, economic or financial rights. Where the project and the structure of the transaction allow it, the potential benefits include raising capital without selling the asset itself, involving a broader group of participants, and recording each participant’s rights in a traceable and verifiable way.
None of this is automatic, and that is the point. Tokenization does not create funding, investors or a sound project structure by itself. It becomes useful only when the project is already sufficiently in order. And anyone approaching a transaction involving financial instruments for the first time will soon encounter a word that can appear daunting: prospectus.
The prospectus and what changed in 2026
A prospectus is the disclosure document that, where required, must be approved by the competent authority before certain securities can be offered to the public. Preparing one requires time, specialist expertise and costs that can materially affect the feasibility of smaller transactions.
From 5 June 2026, the European framework as amended by the Listing Act provides, for public offers of securities falling within the Prospectus Regulation, an exemption from the obligation to publish a prospectus where the total aggregated consideration is below EUR 12 million per issuer or offeror, calculated over a 12-month period in accordance with the applicable rules. Member States may instead choose a EUR 5 million threshold. The exemption concerns offers that do not require cross-border passporting of a prospectus and does not remove any national disclosure requirements that may apply. For a project seeking to raise a few million euros, one obstacle may therefore have been reduced, but the assessment still depends on the actual structure of the transaction and the jurisdiction concerned.
Three questions the prospectus threshold does not answer
No prospectus does not mean no rules. Before discussing amounts or technology, at least three questions need an answer. The first is: what does the token holder actually receive? If a token is intended solely to provide access to goods or services supplied by its issuer, it may fall within the utility-token category governed by MiCAR. If the rights represented by the token instead cause it to qualify as a financial instrument, a different framework applies, including the rules governing financial markets under MiFID II. Economic rights therefore need to be assessed according to their nature and the overall structure of the transaction; their presence alone does not automatically determine a token’s classification. The technology may be similar, but the regulatory framework is not. Nor does a token automatically transfer ownership of the underlying property: the relationship between the token, the rights represented, the issuer and the asset must be defined precisely.
The second question is: is the asset ready? Title, permits, permitted use, valuation and the economic sustainability of the project all need to be verified. A token does not put an asset in order if it is not already in order; if anything, it makes those problems relevant to a wider group of parties. Before rights are represented digitally, the project must first be shown to be legally and operationally viable.
The third question is: how will the transaction be offered, and to whom? An exemption from the prospectus requirement does not remove other applicable rules. If the structure involves investment services, such as placing financial instruments on behalf of the issuer, authorised firms and the relevant regulatory obligations come into play. Even below the prospectus threshold, it is necessary to determine in advance who issues the instruments, who may provide the required services, which investors may participate, and what transfer restrictions may apply.
A real case: a hospitality property in Italy
A project currently under analysis resembles the opening example: a hospitality property of around fifteen rooms in a rural area of Italy. The planned investment is between EUR 3 million and EUR 4.5 million, with a potential capital raise in two tranches. At that scale, the prospectus threshold does not appear to be the main issue, although the conclusion depends on the classification of the instrument, the structure of the offer, the calculation of the relevant amounts and the rules applicable in Italy.
The more important questions emerged elsewhere. What would subscribers actually receive? If the rights represented cause the token to qualify as a financial instrument, the regulatory framework changes and it becomes essential to establish who may provide any investment services required. And do the existing permits correspond to the intended use of the property? In this case, they do not. These are the questions worth answering first, because everything else depends on them. The project is still under analysis: I am describing it to illustrate the method, not to anticipate the outcome.
Where to start
If you are considering tokenizing a property, do not start with the amount to be raised or with the technology. Start with three questions, expressed simply: what am I offering, is my asset in order, and how can the transaction be offered and to whom? An initial feasibility review, or tokenization readiness assessment, helps identify what is already defined and what still needs an answer.
As a technology provider, ArBit Technology Limited develops the infrastructure required to represent and manage tokens digitally throughout their lifecycle. Issuance remains the responsibility of the issuer, while any regulated activities must be carried out by authorised entities where required. Putting the questions in the right order before spending on technology can be done immediately. Tokenization begins before the amount to be raised and before the smart contract. It begins with the answers.
