Last week BNP Paribas (BNPP) structured and tokenized a project finance bond on the public Ethereum blockchain. The proceeds were used to fund solar energy projects through EDF ENR, which helps businesses and individuals install solar panels.
The French bank, Europe’s second largest, cited a key benefit of tokenization as enabling smaller renewable energy projects to raise funds and it allows investments in smaller amounts. Additionally, with the amount of greenwashing that happens, blockchain adds transparency.
Perhaps because the bond investor was BNP Paribas Asset Management, there was no need to keep the bond on the blockchain and within 48 hours, it was converted to a traditional bond. In contrast, we believe that others that have issued public blockchain bonds, such as Societe Generale Forge, Santander, and the European Investment Bank, have retained the asset as tokens.
“This innovation creates further bridges between issuers and investors, bringing a unique end-to-end ESG financing solution to our clients – from origination to distribution, to custody,” said Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB).
Several parts of the bank were involved in the process. BNP Paribas CIB was involved in the issuance that used the group’s tokenization platform AssetFoundry. BNP Paribas Securities Services managed the custody aspects and BNP Paribas Asset Management bought the bond.
Additionally, EDF’s web3 subsidiary Exaion performed the public blockchain tokenization to ensure it used low carbon energy. Given the Ethereum mainnet uses energy-hungry proof of work, this one had us scratching our heads. Perhaps it used carbon offsets. Ethereum is moving to proof of stake, so it’s conceivable that the transaction was on a proof of stake test network. Or it could have been executed on an Ethereum sidechain or Layer 2 solution. We’ve contacted Exaion for clarification.
Meanwhile, BNP Paribas has been involved in many blockchain initiatives in the last few years. For bonds, it is a participant in Marketnode, the Singapore digital assets platform co-founded by the Singapore Exchange (SGX). BNPP Securities Services first trialed custody on Ethereum in 2020, partnering with custody technology company Curv, which PayPal subsequently acquired.