Ethereum-based Tokenization Attracts Traditional Finance Giants
As institutions regain interest in both Bitcoin (BTC) and Ethereum (ETH) as investment assets, they’re also exploring how the blockchain can redefine how finance is done using traditional assets.
French financial giant Societe Generale (GLE), aka SocGen, announced on Monday that it completed a €10 million ($10.8 million) issuance of its digital green bond tokens on the Ethereum network.
Registered by the firm’s crypto-focused arm SG-FORGE, the security tokens represent a 3-year unsecured bond from which proceeds will be directly used to finance projects focused on environmental and social health.
According to SocGen, putting those bonds on-chain helps boost the “transparency and traceability” of its investments, and improves the fluidity of its transactions and settlements.
“Information on the carbon footprint linked to the digital bond infrastructure is available 24/7 in open access directly in the bond’s smart contract,” explained the firm. Using this info, investors can measure the carbon emissions of their security tokens.
Investors may also settle their securities on-chain using the EUR CoinVertible – a euro-pegged stablecoin issued by SocGen in April.
The bond was fully subscribed to by AXA Investment Managers and Generali Investments, through a private placement.
“This is also a first step towards using blockchain as a data repository and certification tool for issuers and investors to foster transparency on ESG and impact data on a global scale,” wrote SocGen.
Institutions Tokenizing Assets
In November, banking giants JP Morgan and Apollo partnered with several blockchain companies to demonstrate a “proof of concept” on how asset managers can tokenize real assets on any chosen blockchain.
Back in September, $500 billion South Korean asset manager Mirae Asset Securities teamed up with Polygon Labs in a push for tokenized securities. According to Polygon Labs co-founder Sandeep Nailwal, the partnership would “greatly contribute to establishing interoperability between South Korea’s domestic financial systems and their foreign counterparts.”
According to Dune Analytics, tokenized public securities currently have a market cap of over $420 million. Other financial giants to enter the tokenized securities field include Franklin Templeton and Standard Chartered.
Many institutions find appeal in leveraging blockchain technology to streamline their own financial activity, even if native crypto assets themselves aren’t appealing to them. In an interview with Fortune last month, Franklin Templeton CEO Jenny Johnson said its “important that we differentiate Bitcoin and blockchain.”
“It’s going to enable the democratization of private markets,” she explained. “you’re able to create and transfer ownership of these hard-to-process assets much easier.”