Société Générale Launches Blockchain-Based Structured Product

French financial services giant Société Générale has issued security tokens on Tezos’ public blockchain as part of its ongoing experimentation with cutting-edge fintech applications.

Latest Move Reflects Bank’s Efforts to Fold Cryptocurrency Operations Into Its Ecosystem

In its latest milestone in the blockchain arena, French multinational bank Société Générale has issued its very first structured product security token. The token, which represents €5 million of Euro Medium Term Notes (EMTN), represents the first move by the bank to tokenize assets. The insurance arm of the bank, Société Générale Assurances, fully subscribed to the security token offerings.

This latest development follows other work the bank has already undertaken through its regulated subsidiary Société Générale – Forge. Since it first tokenized a €100 million covered bond settled in Euros in 2019 on the Ethereum blockchain, the bank has also handled another covered bond worth €40 million for settlement in the Banque de France’s Central Bank Digital Currency (CBDC) in 2020.

The security token, issued on Tezos’ open-source public blockchain, reflects the growing role of this disruptive technology framework, given its ability to make transactions more efficient and cost-effective. From the bank’s perspective, blockchain adds significant capacity for structuring assets with fewer intermediaries in addition to better speed and greater transparency.

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Although blockchain technology still presents a challenging regulatory issue in the region given the absence of clear guidelines, the Société Générale has already been tapped by the European Central Bank to assist with digital bond issuance.

As part of its foray into the crypto ecosystem, the bank intends to leverage its experience in blockchain to effectively bridge the technology with legacy financial systems integrated with the SWIFT system. This initiative will also eventually grow to include crypto-asset structuring, issuance, exchange, and custody services for the bank’s institutional clients planned for launch in 2022.

Do you see advantages in having complex financial instruments on a public blockchain? Let us know in the comments section below.