Interview : Jean-Marc Stenger [SG-Forge] [FR

You've been running SG-Forge for five years. How did the project come about?
Five years ago, Société Générale's management asked us to innovate. We quite quickly identified blockchain as an excellent area for experimentation. In 2018, the group
agreed to create a subsidiary dedicated to crypto, which at the time was no mean feat! 

"We can issue a bond in a few minutes_" 

Was it complicated? 

We never felt any particular reticence, but it's not a trivial subject. What was needed was to show that there was an interest, and then we were supported quite clearly by our management. Today you're well beyond experimentation... 

We're at a stage where there are real use cases linked to blockchain and digital assets, so we need to develop an activity and a business with the aim of generating revenue. 

What are these identified use cases? 

Clearly the ability to issue financial securities from the traditional world on a public blockchain. Today, the financial system is geographically limited. You can't exchange securities anywhere on the planet, whereas a public blockchain like Ethereum makes it possible. 

Automation through smart contracts also saves a considerable amount of time when issuing assets. We offer structured products on the one hand, as well as the possibility of issuing bonds. 

What are the benefits for your customers? 

Actually, structuring a traditional bond takes, in the best of cases, at least two weeks, and during that time the market continues to evolve. Once the bond has been created, it has to be placed with investors, with marketing issues limiting the number of buyers. Using blockchain, we are offering a standardised smart contract system.

We are providing the issuer with an interface through which they can play with a number of parameters. Once they have determined the parameters, all they have to do is press a button and the issue is completed in a few minutes with a theoretical capacity for placement on a global scale. 

In the near future, what types of financial assets could be tokenised on a public blockchain like Ethereum? Today, there are many players pushing to apply tokenisation to more "illiquid" financial assets such as real estate or shares in private equity funds. 

Personally, I think it will be difficult to do so in the short term because there are too many technical and regulatory parameters to align for this kind of operation. On the other hand, assets linked to the bond market, i.e. the debt market, lend themselves perfectly to this, not least because the legal constraints are much less significant. We can already offer the same equivalence in terms of rights, duties and regulatory obligations to the issuer and investors between a bond in "blockchain format" and a traditional bond. 

What are the obstacles to the development of tokenisation?‍

It is undeniably the standardisation of practices on a global scale. At the moment, there are about ten players who are well advanced in tokenisation. The problem is that each of them, including SG-Forge, has developed its own way of issuing tokens... 

As with traditional markets, it will take years, if not longer, to create common standards. This is why we have chosen to open-source a number of our operational protocols. Finance will remain interconnected, so we need a common language. So we need to have a common language. 

Some financial players explain that one of the biggest obstacles to tokenisation remains the need for a settlement currency to buy these assets? Is this the aim of EUR CoinVertible, the stablecoin you launched last April?‍

This is effectively one of the three main use cases for the stablecoin we launched. The euro CoinVertible should enable our customers to buy and sell bonds or structured products on the blockchain. 

The second use case is cross-border payments, the volumes of which are growing all the time. We will soon have institutional customers who will be able to start subscribing to this offering to conduct their own experiments. 

Finally, our CoinVertible EUR should also serve a clientele of crypto investors who might be interested in the idea of having at their disposal a stablecoin structured in a way that we consider more secure than the other stablecoins on the market.The big difference is that the reserve asset is not held by SG-Forge but by an external custodian, in this case Equitis.
If SG-Forge or Société Générale were to cease to exist in the future, the reserve would not disappear. The token holder can go directly to Equitis and claim his share. This segregation of funds does not exist among the other major market players.

As with traditional markets, it will take years, if not longer, to create common standards

Currently, what are your CoinVertible reserves made up of?

‍Today, the capitalisation of our stablecoin is €10 million on the Ethereum blockchain. For the moment, the reserves are made up entirely of cash. We are therefore receiving virtually no return, but at a later stage we will turn to fairly traditional assets, such as government bonds, which will provide a return. 

What is the business model for EUR CoinVertible?‍

It is the same as for most other stablecoins on the market. We are remunerated with the return from the assets in reserve. 

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