Crypto-assets and complex products: the AMF adapts its positions

Reminder:

The 2010-05 position sets out four criteria for evaluating whether certain financial instruments may lead to a misinterpretation of risks by non-professional clients, render the product unintelligible, and ultimately result in poor marketing.

Among these criteria is the product’s unusual nature, stemming from the complexity of the underlying instrument (criterion no. 2).

Novelty:

For the satisfaction of this criterion no. 2, the use of crypto-assets as underlying assets of complex debt securities is now presumed compliant if 4 cumulative conditions are met:

✅ 1. Quality of the crypto-asset

• Bitcoin (BTC) or Ether (ETH)
• Or other crypto-assets with:
  • Capitalisation > €10 billion and average daily exchange volume ≥ €50 million (over the 30 days preceding marketing)
  • White paper notified to the AMF (according to the provisions of the MiCA regulation)
  • Admission on a MiCA authorised trading platform
• Basket of crypto-assets: compliance if the majority of components, weighted by their market capitalisation, meets these above criteria
• Exclusion of ART and EMT tokens (MiCA)

✅ 2. Structure of the product

• Indexed, without leverage, on the performance of crypto-assets
• Directly or via a crypto index (compliant with the Benchmark Regulation) and based exclusively on capitalisation or liquidity filters and without a discretionary mechanism.

✅ 3. Nature of the exposure

• Direct holding of the underlying asset by the issuer of the debt instrument
• Exemption if the issuer holds a specific status (credit institution/investment firm) or is guaranteed by a third party with this status or if the issuer's exposure to the underlying is made via an instrument traded on a regulated market.

✅ 4. Custody of underlying assets

• By a crypto-asset service provider (CASP) authorised under MiCA
• Effective segregation, absence of security interests (except for the benefit of the debt security holders) on the underlying asset, legal allocation of the underlying for the exclusive benefit of the holders.
• Staking permitted under strict conditions.

Reminder:

The position 2013-12 establishes an obligation for certain issuers of complex financial products intended for non-professional clients to provide for a guarantee of the issuer's payment obligations or a guarantee of the capital invested to limit the risk of mis-selling.

Novelty: this position does not apply to complex debt securities indexed to crypto-assets that meet the first three cumulative conditions stated above.

Authored by Vincent Fidelle and Vicenzé Franzil.