(Kitco News) - Socit Gnrale is the latest bank to enter the world of tokenization as the European financial services firm has issued its first digital green bond as a security token on the Ethereum (ETH) blockchain.

The bank said that the security tokens have been fully subscribed by two top-tier institutional investors through a private placement AXA Investment Managers and Generali Investments.

The tokens are directly registered by SG-FORGE, a fully integrated subsidiary of Societe General Group, which is regulated as an investment firm under EU MiFID2 regulation and as a digital asset service provider under French law.

This transaction is the first digital green bond issued by Societe Generale to leverage blockchain's differentiating functionalities, the press release said. This digital format enables increased transparency and traceability as well as improved fluidity and speed in transactions and settlements.

The new offering is structured as a EUR 10 million senior preferred unsecured bond with a maturity of 3 years. An amount equivalent to the net proceeds of this bond will be exclusively used to finance or refinance Eligible Green Activities, as defined in the Sustainable and Positive Impact Bond framework of Societe Generale, SocGen said.

The launch also represents the bank's first step toward using blockchain as a data repository and certification tool for issuers and investors to foster transparency on ESG and impact data on a global scale, they said.

The digital green bond also serves as a testing ground for two key innovations that SocGen plans to develop further.

Information on the carbon footprint linked to the digital bond infrastructure is available 24/7 in open access directly in the bond's smart contract, they said. This enables issuers and investors to measure the carbon emissions of their securities on the financial infrastructure. This innovation is a new service granted by SG-FORGE and follows the publication of its first full lifecycle carbon footprint report on Security Tokens.

The second innovation is the ability for investors to settle securities on-chain through EUR CoinVertible, a digital asset first issued by SG-FORGE in April 2023, which complements traditional cash settlement solutions. While Central Bank Digital Currencies (CBDC) solutions are being experimented, this panel of settlement methods demonstrates the large capabilities of SG-FORGE in providing full spectrum of on-chain services, SocGen said.

The bank said the issuance of this bond demonstrates a commitment to drawing on its financial structuring expertise and on SG-FORGEs technologic capabilities to contribute to building an innovative sustainable bond market.

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SocGen launches first digital green bond on the Ethereum network - Kitco NEWS