France: Société Générale to launch Bitcoin and crypto funds
France: Société Générale to launch Bitcoin and crypto funds
Crypto

France: Société Générale to launch Bitcoin and crypto funds

By Marco Cavicchioli - 22 Sep 2022

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Société Générale is the fourth largest banking group in the Eurozone by capitalization

It is therefore a true European banking giant with a long history behind it. 

It recently officially announced that it has started offering new services dedicated to asset management companies that want to create innovative cryptocurrency-based professional funds.

The French bank was founded as far back as 1864, when the French banking system was not yet highly developed. Among its founders were industrialists Paulin Talabot and Eugène Schneider, as well as the Rothschild family. 

Nowadays it is one of the three pillars of the French banking sector along with LCL (Crédit Lyonnais) and BNP Paribas.

Société Générale approaches the world of cryptocurrencies

The bank has been very interested in technology and innovation lately, so much so that it was among those involved in financing Elon Musk’s later-aborted attempt to buy Twitter. Société Générale put up as much as 875 million euros

Indeed, the Société Générale group has already been operating in crypto markets for some time through its subsidiary Société Générale-FORGE.

Still, this is a gigantic group, with as many as 117,000 employees in 66 different countries. Although it is now a “universal bank,” its core business is still mainly in France, where it has a huge retail network. However, it also has an extensive international network through IBFS (International Banking and Financial Services). 

It is also very active in investment banking, so it is also involved in structured finance, as well as offering miscellaneous financial services and insurance. 

The group ranks 19th in the world in asset management, with more than $1.5 trillion in assets under management (AUM)

In such a scenario, it is quite understandable why they did not want to stay out of the digital asset market. 

Providing services to those who want to create and manage crypto funds will be done by subsidiary Société Générale Securities Services (SGSS). The group points out that an increasing number of investors want to include cryptocurrencies in their portfolios, and asset management companies are adapting accordingly. Hence, they are trying to create new financial products that provide the ability to invest in digital assets.

This is a phenomenon that has actually been going on for years globally, as evidenced by the numerous ETFs on Bitcoin and cryptocurrencies that have already been created and traded for some time. However, in Europe the big banking giants have not yet entered the crypto markets en masse, so the decision of Société Générale appears absolutely noteworthy in this respect. 

They have thus decided to offer asset managers services that enable them to act as crypto fund custodians, valuers, and liability managers through SGSS. The goal is to enable asset management companies to enrich their offerings in a simple way that complies with the European regulatory framework.

Société Générale wants to beat the competition

To be honest, it is not particularly the EU countries in Europe that are the most advanced in the development of crypto infrastructure. As a matter of fact, it is mainly Switzerland and Great Britain that have made the most significant strides over time in this market, although Baltic countries such as Estonia and Lithuania have done so too. It is worth noting that the latter belong to the EU and have adopted the Euro as their currency. 

Perhaps only Germany is a bit ahead of the others among the large EU countries, while in France it seems there is still a lot of skepticism

In the past, some real outcry against cryptocurrencies has come from French politics, while the French central bank has initiated the development of the digital euro. 

However, while French politics does not seem particularly open to the crypto world, the French financial system, and in particular those institutions most open to technology and innovation, may be. 

Société Générale, for example, says that the new SGSS service has already been adopted by Arquant Capital SAS, an asset management company licensed by the French Financial Markets Authority (AMF) that is opening a new range of specialized professional funds under French law, actively managed, and invested in cryptocurrencies, with the first two products based on Bitcoin, Ether, and derivatives.

And so the French financial system has already begun to open up to the crypto world, despite skepticism at the policy level. 

It should be mentioned that Société Générale is a private company, within which the French state can now only count on less than 3% of capital. 71% of the shares are floating on the stock exchange, while the single largest shareholder is the employees’ fund with almost 7%, followed by the American BlackRock. 

In other words, the private banking group has decided to go in one direction, that is, toward what customers and investors demand, while the government is still stuck on positions that are probably anachronistic and tied to old power patterns. 

Comments from those involved in the new initiative 

SGSS director David Abitbol commented on the launch of the new crypto services, saying: 

“By combining Société Générale’s innovation expertise with Arquant Capital’s technical capabilities, we are expanding SGSS’s ability to meet the diversification needs of asset managers.” 

Arquant Capital CEO Eron Angjele added: 

“This solution provides Arquant Capital with an innovative structure that allows us to expand our offerings and focus on creating value for our clients.” 

Such initiatives have already been in place for some time in other markets, and particularly those in the United States and Canada. Even in Switzerland, and to some extent in the UK, traditional financial companies have begun to create and market funds that allow people to invest in cryptocurrencies without having to buy and hold them. 

This is simply financial innovation, which is to say technical and technological progress that eventually makes it inevitable to adapt for those who want to stay in the markets by playing a leading role. 

In this light, Société Générale’s crypto initiative is not at all surprising. On the contrary, it is surprising that so few financial institutions in the EU have yet decided to enter the crypto markets forcefully as well. 

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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