Société Générale issues security token on Tezos blockchain

Tezos’ native token XTZ surged to a new all-time high today following the news of Société Générale’s latest experiment

European investment bank Société Générale, often nicknamed SocGen, announced yesterday that it had issued the first structured product to be registered directly on the Tezos public blockchain in the form of a security token.

This isn’t the firm’s first foray into crypto, but part of its digital transformation which has seen the bank explore the technologies of blockchain and distributed ledgers over the last few years in order to create more innovative business models for its clients.

Regulated Société Générale Group subsidiary Société Générale — Forge provides issuers and investors with services for issuing and managing digital-native financial products registered on the blockchain. It aims to offer services for the structuring, issuing, exchange and custody of crypto assets to professional clients by 2022.

Forge’s previous achievements in the crypto space include issuing the first covered bond as a security token on a public blockchain in 2019 and issuing a €40 million ($48 million) bond that was settled in a central bank digital currency (CBDC). Also last year, Société Générale — Forge partnered with Ethereum software company ConsenSys to run CBDC tests for the Banque du France.

This latest innovation demonstrates the suitability of public blockchains for issuing more complex financial instruments. The increased speed and transparency of transactions and settlements, reductions in costs and number of intermediaries, shortened time-to-market, automated corporate actions, and greater capacity for product structuration that blockchain technology offers mean it can enable better efficiency and fluidity of financial transactions. Security tokens issued by Société Générale — Forge can also be integrated with traditional banking systems which use the SWIFT network.

SocGen’s previous issuance of covered bonds as a security token was done on Ethereum. Tezos is another programmable platform based on smart contracts which can host assets and applications. However, Tezos is a proof-of-stake blockchain that is designed to be upgradable so it can evolve to embrace new technological innovations. This may be why it was selected by Société Générale — Forge for its latest experiment.

Tezos’ native token XTZ surged following the news. In fact, XTZ has been trending upwards since the end of February and today set a new all-time high of $7.48.