Traditional Finance Giants Embrace Ethereum-based Tokenization
As institutions show renewed interest in Bitcoin (BTC) and Ethereum (ETH) as investment assets, they are also exploring the potential of blockchain technology to revolutionize traditional finance.
Societe Generale (GLE), a French financial giant, recently announced the completion of a €10 million ($10.8 million) issuance of its digital green bond tokens on the Ethereum network. These security tokens, registered by the company’s crypto-focused arm SG-FORGE, represent a 3-year unsecured bond that will finance projects focused on environmental and social health.
The move to put these bonds on-chain aims to enhance transparency, traceability, and transaction fluidity. Investors can access information about the carbon footprint linked to the digital bond infrastructure directly in the bond’s smart contract. Additionally, investors have the option to settle their securities on-chain using SocGen’s euro-pegged stablecoin, EUR CoinVertible.
Institutions Tokenizing Assets
Institutional players are increasingly exploring asset tokenization. In November, banking giants JP Morgan and Apollo partnered with blockchain companies to demonstrate how asset managers can tokenize real assets on any chosen blockchain. South Korean asset manager Mirae Asset Securities also teamed up with Polygon Labs to facilitate tokenized securities and establish interoperability between domestic and foreign financial systems.
Tokenized public securities currently have a market cap of over $420 million, according to Dune Analytics. Other financial giants like Franklin Templeton and Standard Chartered have also entered the tokenized securities field.
Many institutions see the potential of blockchain technology to streamline financial activities, even if they are not interested in native cryptocurrencies like Bitcoin. Blockchain enables easier creation and transfer of ownership for traditionally illiquid assets, which has significant implications for democratizing private markets.
Hot Take: Traditional Finance Embraces Blockchain
As traditional finance giants like Societe Generale embrace blockchain technology, we are witnessing a significant shift in the industry. The tokenization of assets on Ethereum and other blockchains offers enhanced transparency, traceability, and efficiency in financial transactions. This move not only attracts institutions to explore new investment opportunities but also paves the way for the democratization of private markets. As more players enter the tokenized securities field, we can expect further innovation and adoption of blockchain technology in the financial sector.
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