“The growth of digital assets could profoundly transform the structure of financial markets.”
“Digital assets and blockchain(1) have the ability to profoundly transform how markets operate and create value. They introduce a major change: the shift from multiple databases (ledgers) that require reconciliation to a shared ledger on which all participants in a value chain can interact. In doing so, they transform market infrastructures, operational processes, and business models. By using cryptography to safeguard the integrity and immutability of transactions, blockchain technology provides a secure way to record, store, and transfer digital assets. The guarantee does not cover what is recorded (the value of the asset itself) but rather the transactions. To put it another way, just because you claim it is a “Picasso” on a blockchain doesn’t make it a “Picasso”. The value of the asset continues to be determined off-chain by trusted expert parties, such as BNP Paribas. With this in mind, we have chosen to work exclusively on regulated financial instruments that are natively recorded in digital form and legally recognised.
CREATING VALUE FOR OUR CLIENTS
We view digital assets as an opportunity to create value for our clients through increased operational efficiency, significantly reduced settlement risks,(2) and, over time, 24/7 services. In this context, tokenisation is a natural extension of our business. This term refers to the issuance of financial securities in a new, more programmable and interoperable format. For over five years, we have approached this subject pragmatically. We develop practical use cases across three asset classes – debt, fund shares, and cash – working within a clear regulatory framework to deliver the level of security our clients require. For example, we issued tokenised bonds to finance renewable energy infrastructure projects, participated in the issuance of a sovereign digital bond for Slovenia, and conducted settlement trials with the European Central Bank. We are also involved in significant projects on the tokenisation of fund shares and the management of tokenised cash, working closely with the European central banks and regulators.
FROM EXPLORING TO SCALING UP
The view that digital assets represent a radical break with the past seems overly simplistic. It may be more accurate to say that we are experiencing a major change in the structure of financial markets, much like the shift brought about by digitalisation. We are only at the dawn of this movement, which calls for foresight, pragmatism, and responsibility. Following the exploration and adoption phases, we are now entering a period of industrialisation and market consolidation in the digital assets sector. At BNP Paribas, we have chosen to be at the forefront of this transformation, staying true to our belief that technology is meaningful only when it fosters trust and generates sustainable value for our clients.”