TBW - Julien Clausse (BNP Paribas): "A billion-dollar bond settlement is unlikely to be done in stablecoin"
BNP Paribas has been running digital asset experiments for several years now. What is your assessment?
We are focused on the tokenization of financial instruments. We have tested several formats: project finance, debt, money market fund units, and we participated in the ECB's experiments on wholesale central bank digital currencies. All of this has helped us better understand the new value chains. People often talk about blockchain's ability to move an asset from A to B efficiently. But what interests us most is what happens before A and after B in financial markets.
With each experiment, we build in production and progressively add new components. We learn how to connect to these new rails, we discover new asset formats. A great deal of the learning concerns legal aspects: the responsibilities of various actors, counterparty risk management. Blockchain does not eliminate these issues. There is always a counterparty, an entity that guarantees the asset recorded on the network. It is first and foremost a business matter, with a strong technological component.
What delivers the most added value at this stage?
On-chain atomic settlement. For two reasons: speed, and the elimination of operational settlement risk. When you exchange an asset for cash on-chain atomically, you limit that risk from an operational standpoint. Cost reduction will probably materialize over time, but not necessarily immediately, as with any technological transition. What is already tangible is speed and the reduction of operational risk. Even though, obviously, I still retain my counterparty risks.
Is tokenization one market or several?
It is not a single market. It is a bit like the early days of the Internet: people talked about the Internet in general, then came Amazon, Netflix and Uber — three completely different businesses. Tokenization is the same. Issuing a money market fund or structuring debt instruments involves different clients, different systems, different regulations. We are seeing markets form by asset class, just as in traditional finance. And what is exciting is the composability between these assets, since ideally they operate on the same network. That will unlock entirely new value propositions.
"We may be less vocal than others, but we build"
The group has been working on these topics for six years but remains relatively discreet. Do you see yourselves as a European leader or more of a fast follower, like UBS?
We have achieved many industry firsts. Renewable project finance at the time, the first tokenized sovereign debt issuance in the eurozone, and more recently our asset manager's tokenized money market fund under French law. We are very proactive. We may be less vocal than others, but we build.
We are the largest European bank, a systemically important institution. Everything we do is carried out with strict compliance and integrity standards. There is a kind of paradox: you cannot be both a leader and move forward without full regulatory and operational clarity. That sometimes means a longer lead time. But in a market that is still limited in size, the distinction between leader and fast follower is not decisive at this point. Besides, those who pave the way do so for everyone. The market is still under construction.
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What stands out in your recent experiments is the number of group entities involved. How do you coordinate all of this internally?
That is a key differentiator for BNP Paribas: we cover virtually the entire financial markets value chain. We have an asset manager, securities services, a CIB. Other banks do not necessarily have that breadth. It gives us an extremely relevant playground for a topic like blockchain, which is inherently cross-cutting. The approach is to test first with our own entities — which remain counterparties to us — and then open up more broadly.
The common thread is our digital assets platforms. Network connectivity runs through a centralized component within the bank: private key management, shared tokenization modules. We work hand in hand with all business lines, but also with support functions: legal, compliance, risk. And we are very precise about the scope of each project. That ties back to my point about the Internet: you need to be precise in order to deliver.
Who drives the initiative within the group?
It is quite use-case driven. Securities services, asset servicing and post-trade are on the front line. They naturally want to push forward. But the topic has escalated to the group's senior management level. It is a priority at the very top.
"Open architectures are starting to gain traction"
US banks appear to be accelerating since the Trump administration took office. How do you view this dynamic?
The market is still nascent. Tokenized money market funds represent roughly 15 billion dollars in total assets under management today, of which nearly 3 billion is BlackRock's. We are at the very beginning.
The key will lie in architectures. There are closed architectures, including at US banks, that work because they already have network effects. And there are more open, interoperable architectures, closer to the spirit of what blockchain brings: an asset circulating within an ecosystem of actors connected to the same network who were not previously connected to each other. Open architectures are starting to gain traction, but it is an ecosystem issue more than a technological one. Europe, for its part, moved faster on regulation. The framework is more mature today.
What is the group's view on the private versus public blockchain debate?
Both are interesting for different purposes. The two criteria that matter are network effects and composability. Whether a blockchain is private or public, if there is sufficient network effect and different types of assets circulating on it, we are interested.
There will probably be multiple blockchains. Central bank money will most likely sit on private infrastructure. Money market funds seem to be moving toward public chains. Stablecoins are natively on public chains. For other use cases, we may be looking at hybrid solutions. And for critical market infrastructure, issues of European sovereignty, governance and concentration of power are obviously important. Eligibility criteria will need to be defined according to use cases.
One essential point: on public chains, our tokens are permissioned and compliant. You have to decouple the network from the token. I often use the analogy of rails and trains: we want a rail network that connects as many stations as possible. On those rails, you can run permissioned trains like the Eurostar, where I have to show my passport, or non-permissioned trains like a regional service. And if there is a network with no assets circulating and nobody connected to it, we do not connect to it. There is no point.
"Each instrument corresponds to different use cases"
Confidentiality on public chains is an increasingly discussed topic. How do you handle it?
The assets circulating are still limited in volume. And there is already a lot you can do: obfuscation, multiplying wallets for a single issuance. The ecosystem has understood the issue. Many players are working on solutions, some of which are being tested and appear to work. Once the ecosystem takes ownership of a problem, solutions emerge.
How does the group position itself on on-chain cash?
There is a whole spectrum of instruments: from unregulated stablecoins, which we obviously will not use, to regulated stablecoins, deposit tokens and wholesale CBDCs. The group's priority is to replicate the two-tier system through the development of tokenized commercial bank money in the form of deposit tokens. Each instrument corresponds to different use cases. A billion-dollar bond settlement is unlikely to be done in stablecoin. It will be done in central bank money. It always comes down to counterparty risk.
Stablecoins exist and work in the crypto-trading world. But they are starting to attract attention from traditional finance. We participate in consortia, with a focus on building ecosystems and interoperability around these instruments. That said, use cases are still being developed. On well-established European corridors, instant payments work very well. But for certain time windows or specific corridors, there may be an opportunity. We are at the very beginning of this discussion. Our job is to expand our toolkit and build the capacity to serve the market when the time comes.
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Are your institutional clients making specific requests around tokenization?
We are in a fairly classic setup: a majority of clients are not yet engaged, some want to test and understand, and a minority already have identified use cases. We are seeing demand around treasury management in particular. Tokenized fund units are generating interest in the context of a more continuous world. But let me be clear: the token can circulate 24/7, but the broader infrastructure and ecosystem do not yet operate that way. There is an entire systems upgrade required to capture the real benefits. We are dealing with sophisticated demand, but it is not yet mass market.
How would you describe the maturity of this market?
We are talking about a long-term transformation, comparable to other major technological shifts, which typically take about twenty years. If we take a starting point around 2015, we are still in an intermediate phase.
The market is in a learning phase. Everything we test today is designed to lay the building blocks for future products, in a logic of progressive construction. That is what all banks are doing, with different approaches. Some invest heavily from the outset, others move step by step. But even those who claim to have a massive market already had it before tokenization. In terms of creating genuinely new markets and new opportunities, we are still quite small.
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