A division of French multinational bank, Societe Generale SA, has sold $112 million worth of tokenized covered bonds, backed by mortgages, to itself. Bloomberg first reported the development.
The bank had previously said that it was looking into how Distributed Ledger Technologies (DLTs) could be used to reduce costs and expedite settlement. The bonds were registered on the Ethereum blockchain.
Tokenized securities is a fast-growing space, and several traditional assets are already being tested for the purpose, including real estate, gold, and art.
Speaking to Bloomberg, former head of covered bond origination at Credit Suisse Group AG, Richard Kemmish, said,
I don’t want to come across as a grumpy old luddite but I’ve got to ask whether we are really ready for this. One of the things that SocGen seem to have emphasized is improving settlement and clearing, but I’m not really sure how much of a problem or expense they are actually avoiding.
Recently, France passed regulation in favor of cryptocurrencies, allowing the $2 trillion life insurance industry to offer crypto investments to its clients through specialized professional funds. France is also spending heavily on blockchain and general tech innovation and has asked fellow EU members to follow its lead on crypto regulation.