Societe Generale Trials Tokenized Bond Sale
Societe Generale SA is trialling the sale of tokenized bonds in an attempt to introduce digital assets to banking. According to statement, Societe Generale “explores a more efficient process for bond issuance.’’
Generated sold had weight of €100 million ($112 million) tokenized covered bonds and bonds were sold to itself to test how blockchain technology can be used to make transactions cheaper and faster. At the time, most bonds take two business days to settle.
The transaction, which took place on the Ethereum blockchain, was awarded the highest credit rating from Moody’s Investors Service and Fitch Ratings. It was managed by the bank’s so-called “internal startup.” (Positive)
Nordea, Major Private Bank in the Nordic Region, Opens Blockchain Trading Platform to More Clients
According to a press release on May 9, Nordic private banking institution Nordea is expanding its offering of the blockchain-based trading platform we.trade to its small and middle-sized business customers (SMEs).
The platform will purportedly help address trust deficits extant in current cross-border trades made by SMEs. Global Head of Trade Finance and Working Capital Management at Nordea, Patrik Zekkar explained:
“Almost 60 percent of the SME’s said that they have to make advance payments so there is obviously a sense of insecurity surrounding cross-border trade. This is unfortunate, not only from a liquidity standpoint, it may also lead to companies refraining from trading and not growing.”
Through the we.trade platform, users can select certain events within a smart contract that will trigger a payment to another party.
We.trade is a joint project of 12 different banks including Deutsche Bank, HSBC, KBC, Société Générale and UniCredit, and is based on the IBM Blockchain platform. We.trade began its first live operations in June 2018. Nordea joined the project in 2017 and soft-launched it for select customers last month.
Nordea is a major private bank in the Nordic region. As of 2016, the firm had a total equity of over 32.4 billion euro, with a net income of 3.7 billion euro that same year. (Positive)
FinCEN Clarifies Money Transmission in DApps Case
On May 9, The United States Financial Crimes Enforcement Network (FinCEN) has issued new guidance concerning Decentralized Applications (DApps).
In the introduction, FinCEN notes the guide serves to clarify and provide examples to make compliance easier for entities whose activities fall under the purview of the Bank Secrecy Act (BSA).
FinCEN defined Dapps as, “Decentralized (distributed) application software programs that operate on a P2P [peer-to-peer] network of computers running a blockchain platform.”
FinCEN notes that any DApps which “accept and transmit value, regardless of whether they operate for profit” all fall under the same regulatory interpretation as mechanical agencies like automated teller machines. Further on, FinCEN says the following:
“Accordingly, when DApps perform money transmission, the definition of money transmitter will apply to the DApp, the owners/operators of the DApp, or both.”
Therefore, any DApp involving money transmission is subject to BSA regulations. (Neutral)