BNP Paribas Securities, the French bank, has partnered with SmartAngels, a Paris, France-based crowdfunding platform, to pilot the use of blockchain technology for funding startups and SMEs (small and medium-size enterprises), according to La Revue Du Digital, a French business news source.
The test, a first in France, will allow unlisted firms to issue securities in the primary market. Investors will also have access to the secondary market. The pilot is scheduled to launch in the second half of the year, pending regulatory approval. BNP Paribas will operate the platform.
The challenge is to enable unlisted firms to issue securities and register their records on a blockchain, as well as to optimize management of shareholder relations which in turn will provide access to the secondary market, according to the SmartAngels .
Philippe Ruault, BNP Paribas Securities Services’ head of product for custody, clearing and settlement, said his company’s mission is to protect the assets of customers and manage various financial transactions, such as collateral management, post-trade services, execution, financing and cash management, according to a blog on the SmartAngels website that referenced a La Tribune article.
BNP Paribas realized the two parties could jointly meet the demand of investors and enterprises. BNP Paribas brings its expertise in securities and technology to market SmartAngels unlisted securities, Ruault noted.
The platform will enable users to digitize the register of investors and shareholders to dispose of online assets held in a decentralized registry.
BNP Paribas is developing the register using blockchain protocol to allow securities issued by companies listed on SmartAngels to be automatically recognized. Noting that BNP Paribas is part of the R3 project, Ruault said his company wants to be part of all projects that define future infrastructures and protocols.
He said blockchain technology does currently not meet the needs of listed markets, which have robust, efficient and regulation-consistent platforms. “The concrete project that we implement nevertheless allows us to be ready and to understand the future positively,” he said.
Investors will have payments immediately processed and re-certificates instantly issued. Transactions will be completed quickly, securely and at low cost.
“By applying the blockchain technology (to the) crowdfunding industry we will accelerate and secure cash flow exchanges securities through e-certificates,” said Ruault.
The platform provides significant innovations for the manager in the areas of process conservation and keeping track of unlisted securities, Ruault added. It is a way for BNP Paribas to test a platform that can eventually apply to listed markets.
The standardization of securities listing will give investors that have the SmartAngels platform more IT security. The platform should also allow users to manage their shareholdings more easily.
SmartAngels will allow investors to trade securities directly on the platform through standardized and secure transactions with BNP Paribas, creating a secondary market for those companies the platform lists. It will provide liquidity to investors, a subject often not addressed in the crowdfunding industry, the bank noted.
The blockchain is expected to streamline startups’ access to financing.
SmartAngels specializes in direct investing in startup capital and SME growth. The platform brought 20,000 members together when it began in 2012, funding 35 companies for €20 million. The platform allows non-listed firms to apply to institutional and individual investors for operations between € 100,000 and € 1 million.
SmartAngels is an approved participatory investment advisor by the Autorite des Marches Financiers (AMF) and is registered with ORIAS, the register of insurance intermediaries.
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