SG-FORGE's EUR CoinVertible: bridging traditional capital markets and digital assets

Tuesday 23 May 2023 08:08 CET | Editor: Mirela Ciobanu | Interview

Interview with Jean-Marc Stenger, Chief Executive Officer at SG-FORGE on the issuance of the EUR CoinVertible

Can you tell us a bit about EUR CoinVertible and what it aims to achieve?

EUR CoinVertible is a digital asset aimed at maintaining a stable value (stablecoin), deployed in Euro on the public Ethereum blockchain. The stablecoin is intended to meet the current expectations of institutional investors and is designed to bridge the gap between traditional capital markets and the digital assets ecosystem based on the CAST open-source interoperability and securitisation framework.


Can you walk us through the main components of EUR CoinVertible?

To ensure compliance with anti-money laundering (AML) and know your customer (KYC) regulations, this token will only be available to qualified institutional investors who have complied with the necessary procedures. The characteristics of the token will be as follows:

  • A secure legal structure ensuring full segregation of collateral assets, direct access to collateral assets for token holders, and implementation of business continuity plan mechanisms in case of a market or technological event;

  • Strict and predefined eligibility criteria for collateral (minimum rating, liquidity),

  • Daily transparency on the value and positions of the EUR CoinVertible collateral, available on the SG-FORGE website;

  • A request for a credit rating from a leading independent credit rating agency,

  • Interoperability with traditional systems;

  • A release of the smart contract source code under the Apache 2.0 open-source license.


What problem does it solve?

EUR CoinVertible, in accordance with the French legal framework applicable to digital assets, has been designed to address growing institutional clients’ needs for a robust settlement asset for on-chain transactions, an innovative solution for corporate treasury, cash management, and cash pooling activities. The aim is also to provide on-chain liquidity funding and refinancing solutions as well as a solution for intra-day liquidity needs (e.g. margin calls).


With the European digital assets’ regulations MiCAR and Pilot Regime constantly in development, how does EUR CoinVertible fit into the current regulatory landscape?

The structure of the EUR CoinVertible has been designed to take into account the Basel Committee’s Prudential treatment of crypto asset exposures. It is a first step and a key part of Societe Generale-FORGE’s global strategy on bank-grade stablecoins in the context of the requirements and best practices derived from the upcoming European digital asset regulations ‘MiCAR’ and ‘DLT Pilot Regime’ for Security Tokens, and of the current experiments on the central bank digital currency (wholesale).


How does the French regulator perceive digital assets in general?

We rather leave it to the regulator to share its own opinion on the matter.


Speaking specifically about SocGen, how important is it for banks to have a cryptocurrency feature in their overall digital offerings?

While SG-FORGE keeps an edge on bank competition (1 to 2 years of development), the gap is progressively tightening as several financial institutions have substantially expanded their investments and partnerships in digital assets markets. The trend is particularly noticeable in crypto-custody and tokenisation activities, with key securities tokens’ issuance offers launched since 2021 by BNPP, GS, UBS, HSBC, and DBS, and significant investments in crypto custody and Stablecoins projects in 2022 by BNP Paribas, Citi, BBVA, DBS, BNY Mellon, and State Street. SG-FORGE regulated entity status is a key differentiating factor from ‘new players’ crypto actors and banking competitors and a key enabler for its business roadmap in 2023.


What are some of the challenges that banks face in providing crypto-based goods and services to their customers?

The launch by Societe Generale-FORGE of the EUR Coinvertible stablecoin is part of Societe Generale Group’s strategy to develop initiatives in the field of digital assets in a secure and transparent framework for institutional investors. For blockchain-based projects such as the EUR CoinVertible, the main challenge has been to build it in a way fully in line with banking, legal and regulatory standards.

Many countries, notably in the European Union (e.g. France, Luxembourg, Germany), have now adopted a comprehensive framework for blockchain-based assets and services. This legal clarity makes it possible for a regulated entity like the investment firm Societe Generale-FORGE to adopt gradually the use of blockchain technology for financial use cases.


Besides BIS, what other groups are working towards achieving social goals spurred by blockchain? Can you address some concerns and educate us on the benefits of blockchain tech and how to mitigate some of the risks?

Various public institutions are analysing the potential use and impacts of blockchain at a broad scale. Major central banks, such as the European central bank, are assessing how these technologies can enhance the digitisation of money for financial institutions, corporates, and natural persons. Besides, the main international institutions, such as the OECD, the IMF, and IOSCO-OICV, are developing research and approaches to better understand the outcomes of these new technologies.

Blockchain technologies provide the possibility to open wide access to transaction data to various actors, including end users. This openness in the access to data is both an opportunity and a risk. Customers have potentially a level of transparency never seen in financial markets, but at the same time, they have to be protected due to the emerging aspect of these technologies. This is precisely where regulated actors such as Societe Generale-FORGE can bring solutions at the bank-grade level.

‘Digital assets with stabilisation mechanisms – i.e. stablecoins – built under a robust banking-grade structure will be a key element to increase trust and confidence in the native crypto ecosystem. This issuance is a major step in Societe Generale–FORGE’s roadmap to deliver innovative solutions to its clients, either real-money institutions and corporates or entities of the crypto industry, and to facilitate the emergence of new market infrastructures based on blockchain technology.’


About Jean-Marc Stenger

CEO Societe Generale - FORGE

Jean-Marc joined Societe Generale in 2000 as an analyst based in Frankfurt, Germany. In 2003 he joined Lyxor Asset Management, a specialised asset management company of the Equity Derivative division of the bank, with 35 other employees. He took responsibility for global portfolio management in 2005 and became Chief Investment Officer and member of the Executive Committee in 2013.

Jean-Marc notably contributed to the development of Lyxor’s activities in Europe, the US, Japan, and the Middle East with major pension plans and sovereign wealth funds. He left Lyxor in 2019, the company employing 600 staff worldwide and managing EUR 137 billion at the time, to create Societe Generale - Forge and expand Societe Generale’s capabilities in digital capital markets.

Jean-Marc has been appointed by the Autorité des Marchés Financiers (AMF) as a member of its consultative commission.

He graduated in mechanical engineering from the Arts et Métiers (ENSAM) and has been an active member of the European blockchain ecosystem for many years.


About Societe Generale–FORGE

Societe Generale–FORGE, a fully integrated and regulated subsidiary of Societe Generale Group, licensed as an investment firm and authorized to provide MiFID2 investment services under the supervision of the Prudential Supervision and Resolution Authority (Autorité de contrôle prudentiel et de résolution), and under the control of the Financial Markets Authority (Autorité des Marchés Financiers - AMF) and registered as PSAN (“Prestataire de Services sur Actifs Numériques” / Digital Asset Service Provider) by the AMF. Societe Generale–FORGE has built an open, secure, and institutional-grade platform for digital asset operations, underpinned by full banking-level safety and regulatory compliance.

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Keywords: stablecoin, digital euro, banks, KYC, AML, digital currency
Categories: DeFi & Crypto & Web3
Companies: SG-FORGE
Countries: France
This article is part of category

DeFi & Crypto & Web3


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