BNP Paribas Securities Services, a French provider of securities services and a wholly-owned subsidiary of French financial institution BNP Paribas Group, has expanded its blockchain platform for private stocks to allow private companies to issue mini-bonds via crowdfunding platforms.
For the initiative, the firm has partnered with renewable energy crowdfunding startups Lendosphere, Enerfip and Lumo.
BNP Paribas Securities Services said it will build a distributed ledger that would allow for the registration of mini-bonds issued via the platform as well as the recording of all related transactions and changes of ownership.
Commenting on the news, Marc Younes, head of business management at BNP Paribas Securities Services’ Innovation & Digital Lab, said:
“We are delighted to be working on this exciting new initiative, which answers the French government’s call to make use of distributed ledgers to support the sale of mini-bonds via crowdfunding platforms.”
In May, the French government announced a new ruling authorizing the use of distributed ledger technology for the issuance of mini-bonds and recording of trades.
The statute gave a clear definition of blockchain in French law and recognized the technology as a recording tool which can be used for the transfer and authentication of ownership titles.
Since then, the government has been encouraging crowdfunding companies to consider using blockchain technology rather than existing individual ledgers to ensure the authentication of transactions.
According to Youned, “blockchain technology is particularly suited to the fundraising needs of private companies as transactions volumes are typically lower than for listed companies.”
“This technology could also serve to standardize processes around the trade lifecycle of minibonds,” he said.
BNP Paribas Securities Services plans to have the new platform ready by the end of the year. It will launch once the final law on mini-bonds is passed in France.
The news follows BNP Paribas Securities Services’ announcement in April of a partnership with French crowdfunding startup SmartAngels to use blockchain technology to allow private companies to issue securities on the primary market and give investors access to the secondary market.
Back then, Philippe Ruault, head of product for clearing, custody and settlement at BNP Paribas Securities Services, said that by applying blockchain technology in the crowdfunding sector, the company could accelerate cash and securities flows by using e-certificates, while making them more secure.
“This is a major innovation for the custody and account-keeping of unlisted securities,” he said. “It provides BNP Paribas Securities Services with the opportunity to test a solution that could be applied to listed securities markets.
Ruault further indicated that “the use of blockchain [was] part of BNP Paribas’ digital strategy.”
BNP Paribas is a French multinational bank and financial services company with global headquarters in Paris. BNP Paribas is one of the top 5 largest banks in the world, as measured by total assets.