How the French financial center is seizing cryptocurrency

The dividing lines between them are gradually blurring TradFi and crypto financeeven if obstacles remain. Tokenization and safety signs Appetite anddigital euro could facilitate its acceptance. Expert adviceAFG, Bpifrance, CACEIS and Oddo BHF.

SG Forge CEO Jean-Marc Stenger explained it in an interview: initial marketing tokenized financial products in Europe it will go through three stages. The first is the organization of operations. This phase is already underway. The next plan will be based on the Pilot Plan.

The final stage will be the transition of all sections of the markets to the market blockchain. The adoption of central bank digital currencies will be one of the triggers. Other engines will be needed. As traditional and cryptocurrency experts gathered at the conference showed, these are gradually starting to work. AM Tech Day 2022.

Tokenization capabilities

Represented among players in asset managementFrench Financial Management Association (AFG), cryptocurrency and blockchain are subjects of long-standing interest, as evidenced by the president of the technological innovation commission.

This is a topic that we are following closely”, Muriel Faure declares.

The organization plans to touch on this topic again crypto in November as part of a dedicated white paper digitization of management funds. And when this industry projects itself in 5-10 years, it looks forward to where tokenization of assets will take place, considered to “create powerful opportunities”.

To realize these opportunities and encourage investments brakes, “psychological, real, fiscal too” but will have to be raised. This is to facilitate transactions Bitcoin“offering the greatest liquidity”, but not only, even as a priority.

The opportunities in asset tokenization are even greater,” the head of AFG insists.

However, private investment Although Pacte law allows allocations to crypto funds in principle, it faces obstacles. The problem: the latter does not find a distributor for, for example, life insurance, and these products are limited to professional customers.

We need to remove bottlenecks, including distribution by insurance companies,” says Muriel Faure.

That’s why management companies are working on it. Acculturation operations, especially with risk departments and bank consultants, should be added to these measures.

Cryptocurrency acceptance on TradFi driven by customer demand

This task of acculturation, bank Oddo BHF carried it internally for several years and with various functions of his organization. This phase started in partnership 4 years ago Consent through the “scratch-to-crypto” project, says Alexis Le Portz, the company’s chief innovation officer.

This project helped us explain what token and blockchain are, what their uses are, and how they can interact with internal systems, and then start to feel confident.”

The results were expected to be seen until 2022, especially through the stake in Coinhouse. Others are expected, for example, through partnerships.

The bitcoin volatility constitutes an asset and a disadvantage, observes the head of Oddo. Being a Franco-German and a Swiss bank, it also has to deal with three different regulatory frameworks. On the other hand, it can count on the confidence of its leader, Philippe Oddo, and the interest of its customers.

Cryptocurrency is a journey that often begins with customer demand CACEIS through a management company and family office, says digital director Arnaud Misset.

Our clients, including one, have asked us to act as trustee, trustee and fund administrator. Custody is not with us at this time. The service is under development and will open in early 2023,” he said.

Tokenization and security token are on the rise in CACEIS

In this regard, he will join forces with the financial player Taurus to store private keys of assets. The CDO of the banking entity, a subsidiary of Crédit Agricole and Santander, is watching the development and expansion of the cryptocurrency.

The change is quite obvious. Two or three years ago, we were only talking about cryptocurrencies. At least a quarter of our inquiries today are about tokenization and security tokens. We see that the market is rapidly changing and changing.”

The rhythm of it transformation moreover, it replaces it rulesthis does not create an obstacle.

Established rules should bring comfort, confidence and reassurance [conseillers et équipes risques] (…) My only fear is that these rules will last too long”, emphasizes Muriel Faure, referring to the Pilot Regime and MiCA, which have probable deadlines in 2029 and 2025.

Therefore, it is difficult to reconcile with a priori long regulatory periods and very short periods of innovative areas like crypto. In this context of legal uncertainty, Oddo BHF has chosen to invest in the short term and partner with a specialized partner to stay in cryptocurrency. Mint.

For its other initiatives, the bank is targeting medium and long-term perspectives. “The complicated thing is to explain that it won’t happen Not for 2023. This is a reality that perhaps leaders who are a little removed from the operational and technological subject have a hard time understanding,” said Alexis Le Portz.

Europe needs to develop pragmatism in cryptocurrency

Breaking down the rules doesn’t make this concept any easier. Different digital assets (crypto-currencies, CBDC, NFT, security token, etc.) depend on different legal frameworks. In addition, cryptocurrency custodian raises serious issues in the fight against money laundering and terrorist financing. Again, solutions like Chainalysis have emerged in the market to solve these problems.

At the supervisory level, the topic is no longer operational and technical (…), but more on risk and compliance aspects, where discussions remain open on many points… and may continue for some time”. Arnaud Misset of CACEIS.

Ivan DeLastours It also warns of a prisoner’s dilemma that could affect Europe. “The crypto planet will go where it can express itself,” said the crypto and blockchain pilot Bpifrance. However, the “pragmatism” of American institutions and regulators today favors the establishment of this industry in Azerbaijan. USA.

We are at a bit of a crossroads. I hope that we will make the right choice and find the European way to achieve a smart synthesis, as in other issues,” the Bpifrance expert urges.

Wholesale digital euro: “amplifier”

AFG representative sees Mika is a step in this direction. The financial industry has other expectations, including: CBDC. Muriel Faure also welcomes the work of the Banque de France to create a wholesale digital euro in 2023.

This is an essential element for the success of the pilot projects for a seamless solution (…) It will be extremely decisive and an impetus for the development of blockchain uses and crypto-assets”, he claims.

This analysis is shared by Arnaud Misset. “We are looking forward to it central bank digital currencies “, he says. Since stablecoins are not used in Europe, the CBDC is essential to bring together the cash and securities sides of the blockchain and thus enable change in market finance.

The sector also needs it secondary market notifies CACEIS CDO to grow. The secondary and the liquidity it provides are not expected for three to five years. Arnaud Misset also calls to put the question backinteraction Starting with the conversation between CBDC and existing stablecoins “at the center of the discussion”.

Finally, Ivan De Lastours encourages European leaders to invest in technological capabilities, as the United States has been able to do with “Chainalysis, an intelligence database on all cryptocurrency transactions.” This is a real war chest.”

They took risks and wrote blank checks to produce champions (…) We have to too [Ndlr : l’Europe] we are investing in tools to have our own technical capabilities (…) This is a European issue.”

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