French multinational financial services company BNP Paribas is developing a new blockchain platform designed to allow private companies to issue mini-bonds—short-term debt instruments sold to investors. The project represents the bank's latest foray into distributed ledger technology, aiming to modernize fundraising processes for unlisted firms.
BNP Paribas' Newest Initiative
The bank's custody arm, BNP Paribas Securities Services, is leading the effort at its Innovation & Digital Lab. The blockchain will maintain a complete record of all mini-bonds issued through the platform, including all ownership changes. The bank stated that blockchain technology will provide security, speed, and efficiency for financial transactions.
Marc Younes, Head of Business Management at BNP Paribas Securities Services' Innovation & Digital Lab, commented: “Blockchain technology is particularly suited to the fundraising needs of private companies as transaction volumes are typically lower than for listed companies. This technology could also serve to standardize processes around the trade lifecycle of mini-bonds.”
Partnership with Three Companies
For the mini-bond project, BNP Paribas has partnered with three French renewable energy crowdfunding platforms: Lendosphere, Enerfip, and Lumo. Lendosphere, launched in December 2014, focuses on energy and ecological transition projects including renewables, circular economy, green buildings, clean mobility, eco-technologies, and sustainable agriculture. Enerfip, launched in fall 2014, specializes in solar, wind, hydro, biomass, and marine energy. Lumo, founded in 2012, is another crowdfunding platform dedicated to renewable energy; in June 2016, it partnered with ElectriCChain to deliver SolarCoin to investors.
In April 2016, BNP Paribas also teamed up with investment platform SmartAngels to develop a blockchain-based crowdfunding pilot for share issuance. The bank aimed to launch that platform in the second half of 2016, subject to regulatory approvals.
French Mini-Bond Law
The blockchain mini-bond initiative follows the French government's announcement that it would allow private companies to issue mini-bonds on crowdfunding platforms. The rule, which has not received final approval at the time of writing, specifically permits issuance via distributed ledgers. To be ready as soon as the law is enacted, BNP Paribas plans to have its new platform operational by the end of 2016. This move is expected to provide private companies with a more efficient, lower-cost, and transparent funding channel, further demonstrating the real-world potential of blockchain technology in the financial sector.