France’s third-largest multinational investment bank and financial services company, Societe Generale (SocGen), submitted a MIP6 proposal to the DeFi Makerdao platform governance forum to use DAI stablecoins to refinance token concept bond. Societe Generale’s proposal seeks approval from DeFi to accept the chain bond tokens issued by the bank as collateral for a DAI stablecoin loan.
The French bank requested a $ 20 million DAI stablecoins loan using bond tokens as collateral. This could be perhaps the biggest institutional adoption of DeFi. The French government recognizes both chain bond tokens and DAI stablecoins. The MIP6 proposal further highlighted the following:
  • The refinance transaction initiative combines traditional capital market activities with the thriving ecosystem.
  • The proposal would be a pilot project and aims to shape and promote experience in the French legal framework.

The security token refinancing proposal was released on October 1, 2021 on behalf of the French bank’s subsidiary, SocGen-Forge or SG-Forge which focuses on digital assets. The initiative is in line with SG-Forge’s earlier innovative process and solutions according to Forge officials, as reported on Bitcoin.com. SocGen has been a leader in experimentation with blockchain-based assets.
Covered bonds, also known as OFH bonds, were issued by the bank as security tokens on the Ethereum blockchain in 2019 itself. The covered bond tokens for which the bank submitted proposals to Makerdao were issued in 2020 on the Ethereum blockchain, at a fixed rate of 0%, with a maturity in 2025. These bonds have an AAA rating under Moody, principal US financial services provider, and Fitch, the leading international credit rating agency. Covered bonds are derivative instruments such as mortgage or asset backed securities. This is a set of loans that are first issued by banks and then sold to financial institutions.
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