BNP Paribas Securities Services, a custodian subsidiary of BNP Paribas, and French direct investment platform SmartAngels, have signed a strategic partnership to use blockchain technology for crowdfunding of private companies.
The two partners will permit private companies to issue securities on the primary market and give investors access to the secondary market using blockchain technology. The pilot scheme is scheduled for launch in the second half of 2016, subject to regulatory approvals.
Under the partnership, BNP Paribas Securities Services is developing a share register that uses the Blockchain protocol, which will automatically register financial securities issued by SmartAngels’ client companies.
Investor payments will be processed immediately and e-certificates will be issued to them straight away.
In a crowdfunding sector showing massive rapid growth, the blockchain-based solution will standardize the securities registration process, providing investors with additional IT and trade processing security. At the same time, the Blockchain platform operated by BNP Paribas will simplify the management of shareholders for issuers.
Philippe Ruault, Head of product for clearing, custody and settlement at BNP Paribas Securities Services, said:
“By applying Blockchain technology in the crowdfunding sector, we will accelerate cash and securities flows by using e-certificates, and make them more secure. This is a major innovation for the custody and account-keeping of unlisted securities. It also provides BNP Paribas Securities Services with the opportunity to test a solution that could be applied to listed securities markets. The use of Blockchain is part of BNP Paribas’ digital strategy.”
The standardization of transactions and the enhanced security provided by BNP Paribas will also allow investors to trade their shares directly on the SmartAngels platform, creating a secondary market for companies registered with the platform. This will in theory make crowdfunding investments much more liquid.
Benoit Bazzocchi, founder of SmartAngels, added:
“At the moment, only a few thousand companies are listed on the financial markets in Europe. The integration of Blockchain on crowdfunding platforms will give hundreds of thousands of start-ups and growth SMEs fast access to low-cost financing from individual and professional investors.”
BNP Paribas has been researching Blockchain technology since 2011 and is part of the R3 and CDC industry consortiums. The Group has also invested in Digital Asset Holdings and has organised several bizhackathons on Blockchain to understand how the technology can be applied to its business activities.
SmartAngels.fr is a major crowdfunding platform in France for direct investment in the capital of start-ups and growth SMEs by individual and professional investors. As a pioneer of direct investment in non-listed companies, SmartAngels counts 20,000 registered members having invested €20 million in 35 companies since 2012.
SmartAngels has been approved as a Crowdfunding Investor Adviser (CIP) by the French Financial Markets Authority (AMF) since February 2015.