France is positioning itself at the forefront of financial innovation with the launch of Lightning Stock Exchange (Lise), a new, fully tokenized equity exchange that aims to revolutionize the IPO process for small and medium-sized enterprises (SMEs). Lise has been granted a DLT (Distributed Ledger Technology) trading and settlement (TSS) license by France's Prudential Supervision and Resolution Authority (ACPR), paving the way for its operations in Europe.

Lise is a subsidiary of Kriptown, which is backed by major French banks such as BNP Paribas and Bpifrance. Kriptown envisions itself as a "neo-exchange for startups and SMEs" with a strong focus on digital assets. According to Lise Managing Director Mark Kepeneghian, this license authorizes them to operate the first tokenized stock exchange dedicated to equities in Europe.

The DLT TSS license operates under the European Union's DLT Pilot Regime, which provides a legal framework for trading and settling transactions in crypto assets that qualify as financial instruments under the Markets in Financial Instruments Directive (MiFID II). This regime, which came into force in March 2023, enables Lise to combine market and post-trade functions within a single infrastructure, marking a significant shift in how financial markets operate. This includes a combination of multilateral trading facilities (MTFs) and central securities depositories (CSDs).

Lise intends to "fundamentally rethink" the traditional IPO concept by using asset tokenization. The platform will allow small and mid-sized companies to list tokenized shares for direct retail investor participation. Individual investors can trade tokenized stocks directly without needing brokerage accounts, with each user receiving a digital wallet to record share ownership on the blockchain. This disintermediation cuts out the custody and settlement layers typically between investors and their holdings. The platform will target French firms valued below €500 million, providing them with an alternative to traditional venues like Euronext.

Tokenization offers several advantages for the small businesses Lise is targeting, who often lack the resources of larger corporations, which restricts their access to public market financing. Lise's infrastructure aims to reduce the costs associated with IPOs and public listings.

To ensure investor protection, Lise's rules require retail participants to pass a knowledge test covering blockchain technology and associated risks before gaining trading access. The platform will initially only accept French joint-stock companies and limited partnerships by shares.

While traditional stock exchanges have been slow to adopt tokenized stocks, the trend has been gaining momentum since 2024, with projections estimating a $2 trillion market within five years. Boerse Stuttgart and the New Zealand exchange are also considering similar moves.

The Autorité des Marchés Financiers (AMF) approved LISE SA's 72-page rulebook on October 13, a crucial step towards modernizing capital markets infrastructure. While the operating rules have been approved, Lise still requires final authorization from French banking regulators before commencing operations.

Crédit Agricole has also demonstrated confidence in the future of tokenized exchanges by acquiring a minority stake in Kriptown. The EU's Tokenization Regime excludes large corporations from its DLT Pilot Regime, ensuring that the initial focus remains on companies valued at less than 500 million euros and bond issuances of less than 1 billion euros.