BNP Paribas to launch blockchain crowdfunding platform for issuing mini-bonds

On September 19, BNP Paribas announced that it has reached a cooperation with renewable energy crowdfunding providers Lendosphere, Enerfip and Lumo to try to issue mini bonds for private companies through distributed ledger technology.

Earlier this year, the bank revealed it had partnered with investment platform SmartAngels to develop a blockchain-based crowdfunding platform that would allow private companies to issue shares.

The distributed ledger the bank is developing as part of the new initiative will record all minibonds issued through the platform and changes in their ownership.

BNP Paribas said the use of distributed ledger technology will ensure that transactions are executed more securely, faster and more efficiently. Its goal is to have the new platform ready by the end of 2016 and to officially launch it after passing the final legal approval.

Marc Younes, Head of Business Management, Innovation and Digital Lab, BNP Paribas Securities Services, said:

“Blockchain technology is particularly suitable for the financing needs of private companies, as their trading volumes are generally much lower than those of public companies. This technology can also help to standardize the process of mini-bond transaction lifecycle.”

The plan follows the French government’s decision earlier this year to allow private companies to issue mini-bonds on crowdfunding platforms. The regulation, which was published in April, specifies that mini-bonds can be issued using distributed ledger technology.

Blockchain technology was originally used as the underlying technology of Bitcoin. Bitcoin's shared ledger is maintained by network computers on the Internet rather than a centralized authority.

Banks and other financial institutions hope to use the technology to streamline a wide range of processes, including share clearing, settlement and custody.