09 May 2019 Arjun Agarwal
Societe Generale SA Tested Tokenized Securities, Opening A Big Market Ahead
Societe Generale SA managed to transfer 100 million euros worth of bonds /debt obligations/ within a so-called “internal startup” utilizing digital currencies. The French bank issued the tokens to test how the newly-forming security token sector would speed up transactions, settlements, security, and transparency.
On April 18th the SFH branch of Societe Generale SA issued 100 million euros worth of covered bonds via a security token, running on Ethereum’s Blockchain. The token issuance also received AAA rating by Moody’s and Fitch, making SocGen the first European bank to conduct such large-scale security token trials.
This is not SocGen’s first blockchain initiative. The bank recently launched We.Trade – a blockchain-based trading platform, available to corporate clients throughout France.
Although security tokens and their offerings are still in their early days, financial experts are expecting a real boom in security token offerings, a need for them and a massive shift towards a new, efficient, and cheap way of getting shares of a company.
Traditional market players, such as other major banks, are still skeptical about security tokens, but experts are predicting that the security token market would reach $25 trillion in asset value over the next ten years.
“The security token market is far from mature, and it will need more time to get regulated, governed and monitored properly.”, Romal Almazo, the Head of Crypto in Capco.
Every asset that we possess will be eventually tokenized and traded on the Blockchain. “And it’s not about liquidizing otherwise non-liquid assets, such as real-estate. It is about granting existing markets with greater efficiency, which will lead to mass adoption.”, Graham Rodford, CEO and co-founder of security token trading company Archax, stated.
The mechanism of security tokens may be new, but the idea of issuing bonds dates well back in the 18th century. But now stocks and bonds can be safely, quickly and efficiently transferred between parties.
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