In recent years, European institutions have shown significant interest and involvement in the blockchain industry, recognizing its potential to revolutionize the way businesses operate. Banks and major financial players have been proactive in addressing the increasing institutional demand for digital assets, focusing on custody, digital finance strategy, and tokenization.
In many cases, European institutions have outpaced their US counterparts in development and adoption. This article examines various initiatives by European financial institutions that highlight the maturation of the blockchain space.
Societe Generale, France’s third-largest bank, deployed an Ethereum contract for a euro-pegged stablecoin, EUR CoinVertible (EURCV), in April. The bank’s blockchain-focused subsidiary, Societe Generale-Forge, announced that the new stablecoin would be available exclusively to institutional investors who pass rigorous KYC and AML checks. Furthermore, EURCV complies with the Basel Committee’s prudential treatment of crypto asset exposures, enhancing its credibility among European regulators.
European Investment Bank
The European Investment Bank (EIB), the primary lender of the European Union, issued its first sterling-denominated digital bond on Ethereum earlier this year. This followed the EIB’s previous euro-denominated digital bond sales on Ethereum in 2021. The EIB’s blockchain initiatives represent a significant endorsement from the European Union.
German multinational Deutsche Börse selected Google Cloud in February to support its digital securities platform, D7. This platform, which offers an institutional-grade solution, intends to support multiple blockchains and protocols, demonstrating Deutsche Börse’s commitment to blockchain adoption.
German engineering giant Siemens issued a $65 million one-year bond on the Polygon blockchain in February, in accordance with Germany’s Electronic Securities Act. Major investors in the digital bond included DekaBank, DZ Bank, and Union Investment.
Dutch bank ABN AMRO utilized the Stellar blockchain to issue a $492,000 bond on behalf of an aircraft parts company in January. The bank collaborated with tokenization firm Bitbond and Fireblocks to facilitate custody, showcasing its interest in blockchain solutions for bond issuance.
Swiss bank UBS issued a $370 million bond on the SIX Digital Exchange blockchain platform, which targets regulated tokenized offerings. The bond was also sold on the Six Swiss exchange, and investors could choose to clear the bond on either SDX or SIX. The three-year bond carried a 2.33% coupon.
In July of the previous year, BNP Paribas tokenized a bond using Ethereum to fund a solar energy project under French utility giant EDF. This innovative approach allowed for smaller investments, fostering the development of smaller renewable energy projects.
In September 2019, Spanish bank Banco Santander issued a $20 million bond on the Ethereum mainnet, which it claimed to be the first end-to-end blockchain bond. The bond matured in a year, delivering 1.98% returns every quarter. More recently, the bank has been testing a blockchain-based tokenization platform for transferring car ownership of used vehicles in Brazil.
European institutions have demonstrated their commitment to leveraging blockchain technology through various use cases. As these institutions continue to explore blockchain’s potential, it is anticipated that more innovative solutions will emerge, further transforming the financial industry.