CoinVertible: behind the scenes of Societe Generale's stablecoin

What are Societe Generale's ambitions in the crypto world? While the question was still worth asking two years ago, things seem pretty clear: they're big, and Forge's latest project is the best illustration of that.

The French bank's crypto subsidiary created in 2018 announced on 20 April the launch of CoinVertible, a euro stablecoin based on the Ethereum blockchain, in other words a public protocol, which is a first for a bank.

CoinVertible is aimed at Societe Generale's institutional customers (asset managers, institutional investors, insurers, etc.). The main purpose of this project is to facilitate transactions in security tokens (tokens that represent financial securities such as shares, editor's note), a subject on which the bank based in La Défense, next to Paris, is at the forefront.

In 2019, the bank had issued a €100 million bond in the form of security tokens via the Ethereum blockchain. In 2021, it had been the first bank to issue a structured product directly registered on the blockchain (this time Tezos). Except that each time, these transactions were settled in parallel with traditional currencies. The idea of this stablecoin is to act as a means of onchain payment and therefore accelerate the adoption of tokenised assets.

"This had been a request from our customers for a little while, they needed a settlement token whose value is stable and which is natively on the blockchain," explains Jean-Marc Stenger, Forge's boss.

"We are seeing a higher-than-expected adoption curve on the tokenisation market, with many other banks now working on these subjects, which was not the case two years ago," he continues.

This stablecoin is special and stands out from other projects familiar to the crypto community, particularly in terms of control. For a transaction to be validated, Societe Generale must give its approval. The bank can also destroy stablecoins on an address that it does not control.

These parameters have prompted numerous reactions and acerbic comments on social networks. Some spoke of a "public" stablecoin in name only. "It's important to understand that our project has nothing to do with stablecoins intended for the general public," points out Jean-Marc Stenger. "CoinVertible caters for certain specific uses reserved exclusively for qualified institutional clients", he warns in response to the occasional criticism of its lack of decentralisation.

Société Générale is not just targeting traditional players, however, and its aim is also to address a web3 clientele: Exchanges, brokers and crypto asset managers. CoinVertible will also be able to be integrated into transactions conducted via the Maker decentralised finance protocol, on which Forge has been working for several months.

In January this year, the bank took out a loan using digital assets placed as collateral. Other experiments are set to follow with other DeFi players.