July 24, 2022
In the early days of July, BNP Paribas (BNPP) structured and tokenized a project finance bond on the public Ethereum blockchain. The proceeds were used to fund solar energy projects through EDF ENR, which helps businesses and individuals install solar panels. Within 48 hours the bond had no need to stay on the blockchain and it was converted to a traditional bond.
Other players that have issued public blockchain bonds [such as Societe Generale Forge, Santander, and the European Investment Bank], have retained the asset as tokens.
The French bank, Europe’s second largest, cited a key benefit of tokenization as enabling smaller renewable energy projects to raise funds and it allows investments in smaller amounts. Additionally, with the amount of greenwashing that happens, blockchain adds transparency.
“This innovation creates further bridges between issuers and investors, bringing a unique end-to-end ESG financing solution to our clients – from origination to distribution, to custody,” said Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB).
Several parts of the bank were involved in the process. BNP Paribas CIB was involved in the issuance that used the group’s tokenization platform AssetFoundry.
Additionally, EDF’s web3 subsidiary Exaion performed the public blockchain tokenization to ensure it used low carbon energy.
Meanwhile, BNP Paribas has been involved in many blockchain initiatives in the last few years. For bonds, it is a participant in Marketnode, the Singapore digital assets platform co-founded by the Singapore Exchange (SGX).
This recent update is demonstrating how the old financial trading and investing world is moving forward towards the new and progressive financial world; one that combines the old fashion opportunities and transactions and the new technology such as cryptocurrency, blockchain and more.
An interesting point of view is to notice how the cryptocurrency fits in the capital market, especially in the shares and bonds’ world. It seems that this combination is affecting the market in a positive way; investors can invest in smaller amounts and approach smaller projects. The tokenization if the old financial world also makes the investment world more accessible to a wider range of investors and expending and promoting the field of ESG investments.
This document is intended to provide only a general background regarding this matter. This document should not be regarded as setting out binding legal advice but rather as a practical overview that is based on our understanding. APM & Co. is not licensed to practice law outside of Israel.
Please let us know if you have any further questions.
APM Blockchain and Cryptocurrency Team.