by JP Buntinx
BNP Paribas is one of the many global financial institutions exploring blockchain technology. Through its Securities Services arm, the group will expand their blockchain platform for private stocks. In doing so, the group seeks to help unlisted companies by letting them issue ‘minibonds’ through crowdfunding platforms.
Issuing Microbonds On The Blockchain
Minibonds will act as a medium for startups and entrepreneurs to venture into the world of crowdfunding. While the concept of raising money from regular consumers and investors all over the world is nothing new, there are some caveats. First of all, crowdfunding platforms will take a cut of the total amount of money raised, since they act as a middleman.
Additionally, things get a bit more complicated when companies try to raise additional funding without providing tangible rewards. Investors would expect some sort of a reward from helping out startups and entrepreneurs. Minibonds seem to be the right way to go, as they provide investors with a small financial incentive for helping out the project.
Recording these minibonds and their transactions, as well as the ownership of every bond at any given time, will be done on a blockchain. BNP Paribas Securities Services is working on developing this distributed ledger. As soon as ‘minibonds’ are issued through the platform, the ledger will keep track of everything in real-time.
On this latest development, BNP Paribas Securities Services’ Marc Younes said,
“Blockchain technology is particularly suited to the fundraising needs of private companies as transactions volumes are typically lower than for listed companies. This technology could also serve to standardise processes around the trade lifecycle of minibonds.”
This new project is made possible thanks to a collaboration with Lendosphere, Lumo, and Enerflip. All three companies are well-respected in the world of renewable energy crowdfunding. Blockchain technology can play a big role in these initiatives, as it provides accountability and transparency in real-time.
The Platform Will Go Live Later This Year
According to BNP sources, this blockchain platform is expected to be ready by the end of 2016. Launching the mini bonds initiative will hinge on when legislation regarding these financial instruments is passed in France. For now, that decision is expected by the end of the year as well, albeit no specific dates have been revealed.
It is not the first venture by BNP Paribas in the world of blockchain-based securities. Back in April of 2016, the financial group partnered with Smart Angels to let private companies issue securities using blockchain technology. It is evident BNP Paribas has big plans for distributed ledgers moving forward.