France’s financial regulator, the Autorité des MarchésFinanciers, has updated its policy on complex financial products to reflect therise of crypto-assets and the implementation of the European Markets inCrypto-Assets regulation. The regulator is now clarifying these rules toaccommodate crypto-asset-linked exchange traded notes under certain conditions.In a related move, the AMF approved rules for LISE, thecountry’s first blockchain-based stock exchange. The platform allows directretail trading of tokenized shares for small and mid-sized companies underthe EU Pilot Regime. Investors can trade without brokers using digital wallets,and access requires a knowledge test. LISE targets companies with a marketcapitalisation under €500 million and a total market cap limit of €6 billion,providing an alternative to traditional exchanges such as Euronext.MiCA Provides Regulatory FrameworkMiCA provides a coordinated framework for crypto-assetservice providers and imposes transparency obligations on issuers. The AMF said it adapted its policy to address structuredproducts linked to crypto-assets, noting that certain crypto-assets, if theymeet predefined conditions, “are no longer unusual for retail clients.” The regulator said the changes aim to reflect new marketpractices while continuing to protect retail investors.AMF Seeks Investor ProtectionThe AMF’s policy on complex products is designed to reduceinformation asymmetry between retail investors and product issuers. Previously,the regulator set out criteria to assess whether financial instruments carryrisks that retail clients may not understand. Products failing these criteria were required to carry awarning stating: “the AMF considers that this product is too complex to bemarketed to retail investors and has therefore not reviewed its marketingmaterials.”Four Conditions Apply to Crypto-ETNsThe regulator requires four cumulative conditions forcrypto-ETNs. The underlying crypto-assets must have a market capitalisation ofat least €10 billion, a 30-day average daily trading volume of at least €50million, and be tradable on a MiCA-authorised platform. Products must have no leverage or discretionary component.Exposure must be through direct holding, regulated securities, or regulatedinstruments, and custody must be with a MiCA-authorised service provider.Policy Review Scheduled for 2027The AMF emphasised that crypto-asset-linked debt securitiesremain complex financial instruments and fall under the Markets in FinancialInstruments Regulation. Providers must ensure suitability for retail clients anddefine a target market. Prospectus approval may be required above certainthresholds. The regulator also warned that “crypto-assets can be subject tosharp price fluctuations” and said it plans to review the policy adaptation inthe first half of 2027.This article was written by Tareq Sikder at www.financemagnates.com.