Societe Generale Group, a leading French lender, has reportedly issued a $112 million bond via a security token offered on the Ethereum blockchain.
The financial provider announced the development on Tuesday, April 23, noting that its subsidiary Societe Generale SFH issued the security token bond labeled OFH.
The company’s OFH (obligations de financement de l’habitat) token represented 100 million euros in what is called covered bonds. The issuance falls within a category of security tokens that are ostensibly backed by given assets, and remain as part of the company’s accounting books.
On the same day the French lender announced its covered bond token, a rating agency issued a statement revealing that Societe Generale participated in the issuance as a “sole investor.”
According to Moody’s Investors Service, the financial company issued all the security tokens to itself.
Moody’s also announced that the SFH bond comes with a five-year maturity period that can be extended by a further 12 months. The offering is also pari passu, Latin for “equal footing,” which means that it is rated the same as other covered bonds the issuer provides.
Simply put, it means that if the French company were to go down, then token holders would benefit from equal payouts as other regular bond investors.
Moody’s also rated the company’s move to use blockchain technology as “credit positive,” pointing out transparency, reduced chances of errors as well as cutting intermediaries as some of the advantages the budding technology has over legacy covered bonds.
The project pilot is a design of Societe Generale FORGE, a subsidiary of the company that makes up one of the numerous startups in its intrapreneurial programme. The project received tech advice from PwC, while Gide Loyrette provided legal services.
According to the firm, the “live transaction” provides insight into the efficiency with which bonds can be issued over the blockchain.
The firm added that the technology provides a lot of value, including product scalability, better transparency, and faster transaction settlement and value transferability.
It isn’t the first time Societe Generale has participated in an enterprise blockchain project, having been a founding member we.trade- a trading platform that launched in 2017 and used IBM technology.
The Group also participated in the launch of the Komgo SA commodity trading platform that launched last year.
This April saw the company’s private bank Kleinwort Hambros launch its exchange-traded note (ETN), stating that the target was to invest in blockchain companies.
Elsewhere, blockchain continues to gain massive traction across the globe. The Austrian government officials last September announced the launch of a pilot project that they noted would leverage Ethereum’s blockchain to notarize a $1.3 billion bond that was to be auctioned.
In November, major Spanish bank BBVA announced it had completed a $150 million syndicated loan offered via the Ethereum blockchain.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.
Is Bitcoin’s growth conservative or real?
132 days post the third halving and Bitcoin is trading at $10450. The price has recovered nearly 25% from the post halving dip, it hit a high of 43.7% ROI last month. The ROI growth is in line with post halving prediction with YTD of 54%.
Though there is scope for real growth in price, above December 2017 level, the growth cannot be entirely attributed to the pandemic or Bitcoin’s correlation with Gold, Silver or the USD. There are several triggers along the way that led to the boost in price.
DeFi’s explosive growth did for Bitcoin what ICOs did back in 2017. Before the ICO bubble burst, when top ICO projects like Filecoin, Namecoin, and Tezos raised funds from investors, they were held in Bitcoin and this significantly increased the demand for Bitcoin on spot exchanges. The investment raised by these ICO projects was held in Bitcoin wallets on exchanges or offline and this added to the scarcity in supply, by driving demand across exchanges, globally.
With $9.77 billion locked in DeFi and projects like Yield Farming that have surpassed Bitcoin’s price, DeFi’s TVL is giving a boost for the demand of top cryptocurrencies like Bitcoin and Ethereum. The increased demand along with scarce supply may drive the price to 2017 levels by the end of 2020. Bitcoin Influencer A Pompliano is quoted commenting on the scarcity of supply in an interview with ET.com,
“Any time that you have got an asset that has scarce supply, people are going to be interested because as we know if the supply is capped and demand increases, of course, the price goes up”
This scarcity is visible on exchanges, where Bitcoin inflow is the lowest in 180 days.
When the inflow goes up on exchanges, based on trigger events like increased open interest by institutional investors on CME or movement of BTC by HODLers/ Whales, the price may fluctuate based on our position in the market cycle.
Based on the Ecoinometrics chart above, there is scope for growth beyond the $19k price level and this depends on the next price rally. Institutional investors like MicroStrategy can drive the price higher by creating demand for the asset and its options/ futures. Growth attained post triggers will continue to be conservative, however, it is not as conservative as Gold or Stocks, hence the rewards are higher in the current phase of the market cycle. When the price hits the $19k level, then growth may get real.
The great unbanking: How DeFi is completing the job Bitcoin started
In a broad sense, 2020 has been the year of the COVID-19 pandemic. As it charges toward 1 million deaths and over 30 million infections, governments have been found wanting. Our institutions have crumbled, leaders reacted too slowly, and all of the systems both in place and newly created to protect us — healthcare, aged care, testing, protective equipment supply chains, contact tracing, etc. — have collapsed. But 2020 has also very much been the year of decentralized finance, which has come to be known as DeFi.
DeFi is crypto
To understand why DeFi has captured the imagination of the entire crypto landscape is to understand that it is less about the outrageous returns offered to yield farmers and more about the future possibilities it presents.
Cryptocurrency, and the technology behind it, has always been about future possibilities.
When Bitcoin (BTC) was born to little fanfare in 2009, it was quickly recognized by those familiar with it as having the potential to be the future of money. 11 years on, Bitcoin, with its decentralized global system of nodes and miners keeping the network operational and secure, has met its promise and more.
Not only is it a reliable and fast way for people to permissionlessly send money to each other, it has also become a genuine enterprise-grade investment vehicle, and its investment worthiness appears to be growing. Large and enterprise owners are holding onto it in anticipation of capital growth.
“Bitcoin as an investment vehicle” aside, it remains, in essence, money — a new currency for a new, hyper-connected world.
Bitcoin and/or DeFi
“Bitcoin as money” still works like money insofar as it still relies on a financial ecosystem around it to keep it alive. But that ecosystem is somewhat limited; it consists of those that secure the network on which transactions are transmitted (miners and node operators), wallets, and exchanges where it can be exchanged for other digital and, increasingly, fiat assets.
But a financial services architecture as we know it incorporates a whole lot more in terms of functionality: lending, borrowing, earning interest, paying interest, investing, etc. Bitcoin was never intended to cater to all those mechanisms — but DeFi is.
The next logical step in the evolution of crypto’s gradual assumption of the roles played by traditional finance is being taken by the growing Ethereum-based decentralized finance ecosystem.
DeFi, in many ways, is Bitcoin 2.0. And for that reason, DeFi — although based on Ethereum’s composability and smart contract functionality — furthers the Bitcoin narrative into the future that Bitcoin first allowed us to believe in. With each new DeFi protocol, that future is closing in on us: a world without banks as we have come to know them.
DeFi demonstrates the complementary nature of Ethereum to Bitcoin. By recreating the financial system not from within but from the outside, Ethereum is hosting a movement that completes the circle Bitcoin started.
The vampires aren’t even that bad
Our banking system is as broken as our COVID-19 response was, but can DeFi actually replace it? The DeFi subsector’s most vocal critics would point to the emergence of food-meme protocols SushiSwap, Cream and Yam, along with many others, to suggest the movement resembles more of a circus than a legitimate threat to a giant financial services sector.
Those protocols are considered vampire forks, which are forks of existing protocols, designed to suck liquidity from them. If vampire forks are destructive — and there is no certainty they are — a seminal Rolling Stone article helps put them into perspective. When running through the central role Goldman Sachs played in virtually every financial collapse of the last century, Matt Taibbi called the behemoth:
“The great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
DeFi’s vampires probably serve to further the ecosystem by stress-testing it. Legacy finance’s vampires have had only one function: to take money from everyone else to strengthen themselves.
From the Great Depression, to the dot-com bubble and burst, to the housing crisis, the “great vampire squid” had self-serving financial destruction in mind and its tentacles on virtually every lever that produced those catastrophic episodes in our recent economic histories.
The sector as a whole has long since stopped serving most of our needs. Checking accounts no longer pay interest, accessing money costs money, and large enterprises find financing easy, while small and medium enterprises are left floundering. Try getting a mortgage as an independent contractor without benefits or job security.
Bitcoin democratized money by freeing us from it in its legacy form. Now, DeFi has captured the imagination of the crypto world as its natural extension — not just the democratization of money but the democratization of finance, promising a seismic shift in the way people bank in the future.
That seismic shift will confer benefits on society we could only have dreamed of a decade ago.
Enter the great unbanking.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Paul de Havilland is a fan of disruptive technology and an active investor in startups. He has experience covering both traditional and emerging asset classes and also pens columns on politics and the development sector. His passions include the violin and opera.
There Are Now Over 10,000 Bitcoin ATMs Throughout the World
The number of bitcoin ATMs installed throughout the world has exceeded 10,000, and the United States continue to lead the rest of the world in crypto ATMs with 76% of machines installed. According to CoinATMRadar, the first Bitcoin ATM was installed back in 2013 and in seven years the industry grew to over 10,000 machines […]
The number of bitcoin ATMs installed throughout the world has exceeded 10,000, and the United States continue to lead the rest of the world in crypto ATMs with 76% of machines installed.
According to CoinATMRadar, the first Bitcoin ATM was installed back in 2013 and in seven years the industry grew to over 10,000 machines installed. In comparison, bank ATMs needed nine years to get to 10,000 machines back in the 1970s.
CoinATMRadar writes that after only 3.5 years the number of crypto ATMs grew to 1,000, and that over the next 3.5 years the number surged by 9,000. The first bitocin ATM was installed in Vancouver at the Waves Coffee House, and there is still a machine there.
The idea of a Bitcoin ATM came ot be, according to CoinATMRadar, as entrepreneurs were looking for ways to make bitocin easily available to people, and the general populace was already familiar with ATMs. Companies started working on the project and in 2013 the first one was installed in Canada.
In 2014, the first Bitcoin ATM was installed in the U.S., in Albuquerque, New Mexico, and since then most crypto ATMs have been installed in the country. By 2015, there were only 300 Bitcoin ATMs throughout the world, being installed by small organizations trying to bolster crypto adoption.
CoinATMRadar adds that bitcoin initially dominated crypto ATMs, with only 4% of machines supported an altcoin: litecoin. In 2017, however, the BTC network was congested and transaction fees and confirmation times surged. The firm added:
This resulted in worse UX when transactions started getting stuck and users of ATMs needed to reach support to get it resolved.
It’s worth noting that in 2017 the price of bitcoin hit its near $20,000 all-time high, and as the network was clogged users started using other cryptoassets. ATM operators followed users and started adding support for cryptocurrencies like ETH, LTC, DASH, and others. Nevertheless, around 30% of all crypto ATMs only support Bitcoin transactions.
Featured image via Unsplash.
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