French Bank SocGen Obtains Regulatory Approval to Offer Crypto Assets Services

According to a breaking report released Sunday, Société Générale, a major bank in France, quietly received regulatory approval to operate as a digital asset service provider in the country last month.

The French bank was granted a digital asset service provider (DASP) license by the Autorité des Marchés Financiers (AMF), the French financial market regulator, allowing it to offer crypto services across the nation.

As of last month, through its fully integrated blockchain-focused subsidiary, Societe Generale Forge, the banking giant obtained the authorization that now enables it to offer crypto services to its customers. The move followed an increasing number of banks getting approval to provide digital asset services to users in the jurisdiction.

In July, French Bank BNP Paribas (BNP) entered the crypto custody space via a partnership with Swiss digital asset safekeeping firm Metaco. In April, the French Banque Delubac & Cie, became the first to obtain the status of Digital Asset Service Provider, allowing it to offer regulated crypto services in partnership with Swiss crypto infrastructure provider Taurus.

Cryptocurrency regulation in France took a major step in early May 2022 when the Binance crypto exchange was granted Digital Asset Service Provider registration. The registration allowed Binance to operate its crypto exchange in France.

The announcement established France as the first major European nation to give regulatory approval to a crypto exchange. The bold move secured France’s crypto exchange status and started attracting more crypto firms to operate in the country.

Early this month, followed Binance to launch its footprint in France after it got regulatory approval enabling it to operate as a digital asset service provider. From a regulatory perspective, France is considered crypto-friendly – it has one of the highest crypto adoption rates in Europe, with 16% of French users owning crypto.

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SocGen Introduces Digital Asset Service for Firms to Develop Crypto Funds

Societe Generale Securities Services (SGSS), the third-largest French bank by market cap, announced on Wednesday a new digital asset service designed for asset management firms wishing to develop innovative professional funds based on cryptocurrencies.

The French investment bank has continued expanding its clients’ crypto custody services. This new service will enable the asset managers to offer crypto funds in a “simple and adapted” manner within a framework that is compliant with European regulations, Societe Generale said.

Many investors want to integrate cryptocurrencies into their portfolios. Increasing number of asset management firms are therefore looking to create new ranges of solutions invested mainly in digital assets.

Societe Generale has introduced a new crypto service that enables asset management companies to act as crypto fund custodians, valuators, and liability managers.

The new service has been adopted by French asset management company Arquant Capital SAS, which is launching a range of funds investing in cryptocurrency, beginning with two products based on Bitcoin (BTC), Ether (ETH), and derivatives.

David Abitbol, Head of Societe Generale Securities Services, talked about the development: “This solution provides Arquant Capital with an innovative structuring that allows us to scale our offering and focus on creating value for our clients.”

Societe Generale Group is already recognized as an expert in crypto assets with its subsidiary Societe Generale FORGE. The investment bank, therefore, continues developing its services related to digital assets to meet the needs of its customers.

Since 2019, FORGE, an integrated subsidiary of Societe Generale, has been offering several native security token issuances deployed on blockchain for several institutions, including the European Investment Bank’s (EIB) €100 million digital bond issued in 2021.

Through FORGE, the investment bank offers a range of capital market products to institutional clients under a native security token format on Tezos and Ethereum.

New Opportunities in The Digital Assets Space

In recent months, there has been a prevalent trend among French banking heavyweights moving to offer crypto-related services to their clients as demand increases.

In July, BNP Paribas (BNP), France’s largest bank, entered the crypto custody space via a partnership with Swiss digital asset safekeeping firm Metaco.

In April, French bank Delubac & Cie obtained a registration license to offer digital assets services (the purchase, sale and custody of crypto-assets) to institutions, companies, and individuals. The license enabled the bank to offer three crypto-assets which include Tezos, Bitcoin, and Ethereum, as well as plans to include access to staking and tokenized assets such as NFTs in the service offerings.

Many banks are edging towards crypto custody to respond to the increased demand from investors for cryptocurrencies.

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Investment Banking Giant Wants to Take Out MakerDAO Loans

Key Takeaways

  • French investment bank Société Générale has proposed using its securities to take out a loans through MakerDAO.
  • The Proposal involves creating OFH tokens representing covered bonds which would be deposited into Maker’s vaults.
  • If accepted, the deal would be the first of its kind between a DeFi protocol and a traditional investment firm.

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Société Générale, one of Europe’s biggest investment banks, has propositioned the MakerDAO community to refinance its securities. The bank wants to use covered bonds as collateral to take out Dai stablecoin loans from the protocol.  

DeFi Meets TradFi at MakerDAO

MakerDAO is close to making financial history. 

Societe Generale-Forge (SG-Forge), a subsidiary of French investment bank Société Générale, submitted a proposal to the MakerDAO community Thursday, outlining plans for refinancing covered bonds through MakerDAO’s vaults. If accepted, the deal would be the first of its kind between a DeFi protocol and a traditional investment firm. 

SG-Forge’s proposal involves the creation of “OFH tokens,” securities on the Ethereum blockchain that represent covered bonds backed by home loans. The bonds backing the OFH tokens have been rated aaa by Moody’s and AAA by Fitch, meaning that they have a high level of creditworthiness and a strong capacity to repay investors. 

The OFH tokens will be created under the Compliant Architecture for Security Tokens (CAST), the same framework Société Générale used to launch tokenized debt on the Tezos blockchain earlier this year. 

Once SG-Forge creates the OFH tokens, they would be deposited into MakerDAO’s vaults, allowing the firm to take out an overcollateralized loan of Dai stablecoins with a maturity of six to nine months. 

Like all previous Maker Improvement Proposals (MIPs), MakerDAO token holders will get the final say as to whether or not the DAO will go ahead with SG-Forge’s plan. 

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MakerDAO is a decentralized autonomous organization (DAO) that runs the Maker protocol. This DeFi application allows users to lock up their assets in vaults and take out overcollateralized loans paid out in Maker’s in-house stablecoin, Dai. Maker previously only allowed users to take out loans by depositing crypto assets but started allowing users to mint Dai using real world assets in April. 

So far, the Maker community has responded positively to the proposal, with many DAO members excited for a potential partnership between DeFi and traditional finance. On the other hand, critics have pointed out that while the deal is low risk, it does not reward the DAO much. Interest on the bonds is estimated to be less than similar U.S. corporate bonds, which yield 1.93%. 

Over the past year, Société Générale has experimented with various applications of blockchain technologies in finance. The investment bank previously announced plans to create a central bank digital currency (CBDC) using Tezos. Additionally, it has helped settle bonds on Ethereum through the European Investment Bank. 

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies. 

This news was brought to you by ANKR, our preferred DeFi Partner.

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Societe Generale proposes historic $20M DAI loan in exchange for bond tokens

One of France’s leading banks has turned to decentralized finance pioneer MakerDAO to propose the submission of bond tokens as collateral for a loan of the DAI stablecoin.

The historic proposal called “Security Tokens Refinancing” was submitted to Maker’s governance forums by the international bank on Oct. 1. It would be the first major collaboration between a traditional bank and a DeFi protocol and could open the door for closer integration between the two sectors.

Societe Generale (SG) labeled it as the “first experiment at the crossroads between regulated and open source initiatives.”

The bank has proposed that it provides “OFH” security tokens (obligations de financement de l’habitat) which are characterized as covered bonds under French law, and backed by home loans.

These would be used to collateralize a $20 million loan in Maker’s DAI stablecoin which would be mediated by a number of legal entities and mature in six to nine months.

The Ethereum-based security tokens were issued in May 2020 with a nominal amount of 40 million Euro ($46.3M) and a fixed rate of 0%. They mature in May 2025 and have the top credit rating of AAA by rating agencies Moody’s and Fitch.

MakerDAO founder Rune Christensen said he had “no clue” about this proposal, adding that “this is one of multiple recent examples in Maker Governance of how the post-foundation model of organization is proving to be more scalable.”

Industry observer “DCInvestor” commented on the potential impact of deals such as this on Ethereum and its position as a global settlement layer:

“Societe Generale with their attempt to get their on-chain assets usable in Maker and you’re wondering if Ethereum will become a global settlement layer it’s happening, now.”

SG stated that the loan would be a “pilot use case,” with the goal of helping to “shape and promote an experiment under the French legal framework,” and “enhance a profitable service and foster liquidity for digital bonds.”

SG Forge, a regulated subsidiary of the bank that deals with crypto assets, is managing the proposal which is based on the open-source framework CAST (Compliant Architecture for Security Tokens).

The legal framework for the deal is complex as it needs to integrate an institutional financial organization with a decentralized governance-based network. A flowchart provided by the bank details six separate entities involved in the process. These include the registrar Societe Generale Forge, the bank itself SG, MakerDAO, a legal representative for the DeFi protocol, security agent DIIS Group, and a third-party exchange agent.


Related: Senator Warren’s office confuses MakerDAO for failed 2016 project The DAO

Pseudonymous MakerDAO community member ‘PaperImperium’ commented on the proposal in the forum:

“Maker and SocGen-Forge are standing at the precipice of financial history. What a time to be alive.”

The proposal is currently being discussed and will move to a formal governance vote in the weeks to come.

It is not the first time Societe Generale has dabbled with Ethereum-based security tokens. In April 2019, the bank’s SG Forge unit issued a 100 million Euro bond as an OFH security token on Ethereum.


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One of Europe’s largest investment banks issues security token on Tezos

European financial behemoth Société Générale has issued a security token on the Tezos blockchain.

According to an announcement on Thursday, the move constitutes the first tokenized asset offered by Société Générale.

The bank stated that the security token offering was a significant milestone in the efforts to begin full-spectrum cryptocurrency market operations by 2022.

Société Générale, through its subsidiary, Société Générale – Forge, reportedly plans to issue tokenized securities that can be integrated with legacy banking systems. Apart from asset tokenization, the bank’s crypto foray will also include exchange and custody services for institutional clients. The bank stated:

“This new experimentation, performed in accordance with best market practices, demonstrates the legal, regulatory and operational feasibility of issuing more complex financial instruments (structured products) on public blockchain.”

The maiden security token issuance marks the third consecutive year of crypto and blockchain adoption developments from the stables of Société Générale.

Back in 2019, the bank, via its specialized credit institution Société Générale SFH, issued a 100-million euro bond as a tokenized security on Ethereum.

In May 2020, SFH and SG Forge, together with the Banque de France, issued a tokenized 40-million-euro bond, settled using an experimental central bank digital currency.

Indeed, Société Générale is one of the financial institutions tapped by France’s central bank to conduct its experimental central bank digital currency pilot study.

Earlier in April, Société Générale was among a group of global banks hired by the European Investment Bank to utilize blockchain in digital bond issuance.

While the European Union is yet to arrive at definitive regulations for crypto and blockchain, Société Générale is one of many financial institutions in the region experimenting with the novel technology.