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Nordic Banking Giant Nordea Opens Blockchain Trading Platform to More Clients

Nordea is expanding its blockchain-based we.trade platform to small and medium-sized enterprise clients.

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),  according to a press release on May 9.

The platform will purportedly help address trust deficits extant in current cross-border trades made by SMEs. Patrik Zekkar, Global Head of Trade Finance and Working Capital Management at Nordea, 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, Natixis, Rabobank, Santander, 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.

While Nordea is accepting of blockchain technology, it takes a hard line against cryptocurrencies. In January 2018, the bank banned its employees from owning bitcoin (BTC). Following the announcement of the ban, Danish finance and workers’ rights figures threatened legal action.

The bank also shuttered the account of Norwegian cryptocurrency exchange Bitmynt AS in December 2017. The founder of Bitmynt sued Nordea, but lost his case in May 2018.

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Singapore Regulator Recognizes Potential of Blockchain for Cross-Border Payments

The Chief Fintech Officer of the Monetary Authority of Singapore delivered statements at the Blockchain in Business event at the Massachusetts Institute of Technology.

Sopnendu Mohanty, Chief Fintech Officer of the Monetary Authority of Singapore (MAS), said that blockchain has potential for cross-border payments but the agency “does not see much” in retail bank digital currencies. Mohanty delivered his comments at the Blockchain in Business event at the Massachusetts Institute of Technology on May 2.

Mohanty revealed that back in 2016, policy makers did not have a clear understanding of what blockchain is, so the MSA — Singapore’s central bank — decided to experiment with the technology to better understand it.

The  MSA has since learned a variety of blockchain-related use cases, including how to deploy the technology to organize payments in the banking system, settle payments against securities, as well as how to conduct cross-border payments, said Mohanty.

He continued that, while the agency came to recognize the efficiency gains the technology could bring, it did not see a compelling future for retail bank digital currencies.

As an example, Mohanty referenced the central banks of Singapore and Canada having successfully used their blockchain networks to send each other digital currency. Commenting on the development, Mohanty said then:

“The next wave of central bank blockchain projects can make further progress by bringing technology exploration together with policy questions about the future of cross-border payments.”

In January, the MAS warned the public against an alleged scam, which claimed a cryptocurrency was officially adopted by the government. Apart from reporting on the new crypto scam, the MAS also warned the public in the statement about common problems in investing in cryptocurrencies or digital tokens, emphasizing that such investments are associated with high risk.

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French Lender Societe Generale Issues $112 Million Bond on Ethereum

UPDATE (April 23, 20:45 UTC): This article has been updated to note that Societe Generale issued the bonds to itself, and to include other details from a rating agency report.

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French financial services giant Societe Generale Group has issued about $112 million worth of bonds in the form of a security token on the public ethereum blockchain.

Announced today, a subsidiary called Societe Generale SFH used the OFH token (obligations de financement de l’habitat, or home financing obligations) to represent 100 million euros of covered bonds, a type of security that is backed by specific assets but remains on the issuer’s balance sheet.

However, according to a report published Tuesday by bond rating agency Moody’s Investors Service, Societe Generale was “the sole investor,” meaning the firm issued the securities to itself and no outside buyers were involved.

The bond has a five-year maturity with a 12-month extension period, Moody’s said.  It is pari passu (“on equal footing”) with other covered bonds of the issuer, meaning if the company were to fail, whoever held the tokens at that time would be repaid the same fractional amounts at the same time as regular bondholders, the report said.

The rating agency said it considers the use of blockchain technology “credit positive” for the issuer, in part because of increased transparency and a reduced likelihood of errors “arising from the complexity and the number of intermediaries involved in issuing covered bonds using traditional means.”

The pilot was designed by Societe Generale’s blockchain subsidiary Societe Generale FORGE, “one of the 60 internal startups launched via the Internal Startup Call, the Group’s intrapreneurial programme,” the company said.

Big Four professional-services firm PwC advised the project on the technology and the French law firm Gide Loyrette Nouel was a legal advisor, SocGen said.

“This live transaction explores a more efficient process for bond issuances,” the firm said in a press release, adding:

“Many areas of added value are predicted, among which, product scalability and reduced time to market, computer code automation structuring, thus better transparency, faster transferability and settlement. It proposes a new standard for issuances and secondary market bond trading and reduces cost and the number of intermediaries.”

Past experiments

Societe Generale has been involved in a number of enterprise blockchain projects. It was a founding member of the IBM-powered trade finance platform we.trade in 2017 and commodity trading platform Komgo SA in 2018.

Earlier this month, Societe Generale-owned private bank and wealth manager Kleinwort Hambros announced it had launched an exchange-traded note (ETN) with a focus on investing in blockchain companies.

More broadly, a growing number of enterprises have been experimenting with public blockchains, including big players, but issuing actual digital securities by a global investment bank is rare.

In September, the Austrian government announced a pilot to use the ethereum blockchain to notarize the auction of a government bond worth $1.3 billion.

Two months later, Spanish bank BBVA recorded a $150 million syndicated loan on ethereum, time-stamping data on a loan issued for Red Electrica, Spain’s national electrical grid operator.

Among startups, back in 2017, Nivaura initiated a bond denominated in ether for the London-based luxury retail startup LuxDeco.

Societe Generale building image via Shutterstock

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Forbes Releases List of Billion Dollar Companies Using Blockchain

Finance publication Forbes has released a list of 50 $1 billion firms that are implementing blockchain technology.

Financial news outlet Forbes has released a list of “Blockchain’s Billion Dollar Babies,” or companies implementing blockchain technology that have minimum revenues or valuations of $1 billion, on April 16.

The list includes companies in the cryptocurrency and blockchain development spaces, in addition to traditional financial firms like banks and clearing houses, food companies, supply chain management firms and others.

Most of the companies listed are household names like Amazon, Walmart, Facebook, ING, Mastercard, Microsoft and Nestle.

Cryptocurrency-related companies featured on the list include United States-based cryptocurrency exchange Coinbase, European mining and hardware firm Bitfury, and blockchain-based financial services network and XRP token creator Ripple.

In addition to noting major firms that are dabbling or full-on adopting blockchain technology, the list also includes which blockchain protocols are being adopted and by whom. Various Hyperledger protocols, blockchain consortium R3’s Corda protocol and the Ethereum network are prominently featured at a number of firms across various industries.

Forbes notes the potential for blockchain technology to simplify various business process per the example of Depository Trust & Clearing Corp (DTCC), which keeps records of 90 million transactions a day, or most of the world’s $48 trillion dollars in securities.

Per Forbes, the firm will begin switching its 50,000 accounts to a blockchain-based system, which will help eliminate duplicate procedures and reconciliations that are still prone to happen on traditional electronic clearing networks.

In mid-March, DTCC published a white paper outlining guiding principles for the post-trade processing of tokenized securities. The paper notes the unique characteristics of the nascent market for tokenized securities and proposes that global policy standards for traditional markets are often applicable, and useful for stakeholders to identify the legal responsibilities pertaining to security token platforms.

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Japanese Bank Abandons Work With SBI Ripple’s ‘Money Tap’ App

Resona, one of the three Japanese banks working with SBI Holdings and Ripple on their cash transfer app Money Tap, is pulling out of the project.

The bank – Japan’s fifth largest – announced the decision on Thursday, saying that it would cancel the remittance service provided through the app on May 13. It did not provide any reason for the decision, however.

Money Tap was launched last October with participation from three banks: SBI Sumishin Net Bank, Suruga Bank and Resona. The product provides bank-to-bank money transfers in “real time” using Ripple’s xCurrent payments product.

Money tap is built with distributed ledger technology, according to SBI. It enables users send funds to others at no cost using just recipients’ telephone numbers or a QR code, and utilizes devices’ biometric features, such as fingerprint scanning, for security.

Just last month, Money Tap received investment from 13 banks, which joined the project as shareholders but do not appear to be using its technology as yet.

Exactly a year ago today, CoinDesk reported that banking giant Santander was also launching a money app based on Ripple’s DLT tech. Known as Santander One Pay FX, the app allows customers to complete international transfers generally within one day.

SBI Group has gone full crypto over the last two years, launching an exchange, taking to mining cryptos, investing in hardware wallet makers and, most recently, starting to manufacture mining processors.

Resona Bank branch image via Shutterstock