In May we reported that Crédit Agricole Italia was working with blockchain startup BlockInvest on a tokenized bond solution as part of the Bank of Italys’ DLT trials. The focus was mini bonds for SMEs. Now the bank and startup plan to develop the bond solution beyond the trial, aiming to go into production at some point. Crédit Agricole Italia is an investor in BlockInvest.
The bank is particularly interested in offering the bonds to accredited investors as part of its wealth management division.
“The tokenization of bonds represents a great opportunity to increase the efficiency and accessibility of financial instruments,” said Andrea Riva who leads the Credit Agricole Italia innovation team for capital markets. “The collaboration with BlockInvest will allow us to develop a cutting-edge platform that will enable our customers to benefit from this innovative investment method.”
BlockInvest’s solution uses the Ethereum and Polygon public blockchains. One takeaway from the central bank DLT trials was the need to adapt to ‘new regulatory developments’.
Hence the first phase of the new project is to co-design the processes and assess the regulatory impact of the functionality. After that, it will look to evolve the existing BlockInvest project with additional features. This will include using digital cash on-chain, automating delivery versus payment (DvP), and an on-chain identity solution to ensure the platform is compliant and investors are accredited. Additionally, BlockInvest plans to develop a secondary marketplace solution.
Cash on chain
One option for cash on-chain is a deposit token which is viewed as a short term solution. Another avenue is to assess whether to use a stablecoin issued by a commercial bank in line with EU’s MiCA e-money token legislation.
Regarding identity, this would involve integrating with the bank’s legacy KYC solution and no personal information would be stored on the blockchain.
Both of these are works in progress and are being presented to the Bank of Italy for evaluation.
Meanwhile, Credit Agricole CIB also has a blockchain bond solution so|bond, which was developed in collaboration with Sweden’s SEB and recently used for a green bond issuance by the European Investment Bank (EIB).
Update: Additional details regarding cash-on-ledger and identity checks were added.