Tokenized Bonds: The SG-Forge Case and the Future of Debt Markets

Introduction

From the EIB to Société Générale: how banks are reinventing bond markets.

Tokenized bonds represent the most mature application of tokenization in traditional finance. From the European Investment Bank to Société Générale with SG-Forge, the largest institutions are adopting this technology to modernize debt markets. This guide analyzes the state of the art, major issuances, and opportunities for investors.

What you will discover:

• How tokenized bonds work
• The pioneering issuances of SG-Forge and European institutions
• The French and European regulatory framework
• Advantages for issuers and investors
• How to access this market as an investor

Table of Contents

1. Understanding Tokenized Bonds
2. SG-Forge: The French Pioneer
3. Major Institutional Issuances
4. Advantages of Bond Tokenization
5. Regulatory Framework
6. On-Chain Issuance Process
7. Secondary Market and Liquidity
8. Investing in Tokenized Bonds
9. Tokenized Treasury Bills: A New Asset Class
10. Outlook and Evolution
11. FAQ

1. Understanding Tokenized Bonds

Instant settlement, 60% cost reduction: bonds enter the blockchain era.

Definition and Principles

A tokenized bond is a debt instrument represented as a digital token on a blockchain. The issuer (company, government, institution) commits to repaying principal and paying interest, all managed via smart contracts.

"Bond tokenization reduces settlement times from T+2 to T+0 and cuts issuance costs by 40 to 60%." — SG-Forge, 2024 Activity Report

Difference from a Traditional Bond

Architecture of a Tokenized Bond

┌─────────────────────────────────────────────────────────────┐
│                     ISSUER (e.g., SG)                       │
│                                                             │
│  Issuance decision → Structuring → Documentation            │
│                              │                              │
│                              ▼                              │
│  ┌─────────────────────────────────────────────────────┐   │
│  │           ISSUANCE SMART CONTRACT                    │   │
│  │                                                     │   │
│  │  • Bond terms (nominal, coupon, maturity)           │   │
│  │  • Investor whitelist (KYC)                         │   │
│  │  • Coupon payment mechanism                         │   │
│  │  • Redemption at maturity                           │   │
│  └─────────────────────────────────────────────────────┘   │
│                              │                              │
│            ┌─────────────────┼─────────────────┐           │
│            ▼                 ▼                 ▼           │
│    ┌───────────────┐ ┌───────────────┐ ┌───────────────┐  │
│    │ INVESTOR 1    │ │ INVESTOR 2    │ │ INVESTOR N    │  │
│    │  (100 tokens) │ │  (500 tokens) │ │  (50 tokens)  │  │
│    └───────────────┘ └───────────────┘ └───────────────┘  │
└─────────────────────────────────────────────────────────────┘

2. SG-Forge: The French Pioneer

Société Générale's blockchain subsidiary is revolutionizing European finance.

SG-Forge Overview

SG-Forge (Société Générale – Forge) is Société Générale's subsidiary dedicated to digital assets, created in 2018:

Positioning:

• First European bank to tokenize bonds
• Registered as PSAN with France's AMF
• Issuer of the EURCV stablecoin (EUR CoinVertible)
• Partner of European institutions

Timeline of Achievements

The 2019 SG Bond: A Case Study

Société Générale's first tokenized bond issuance remains a reference:

Issuance characteristics:

• Amount: €100 million
• Maturity: 5 years
• Coupon: Fixed rate
• Blockchain: Public Ethereum
• Standard: Proprietary security token
• Subscribers: SG itself (internal test issuance)

Demonstrated innovations:

• Instant settlement-delivery
• Transparent and auditable register
• Smart contract-programmed coupons
• Compliance with French law

The EURCV Stablecoin

In 2023, SG-Forge launched EUR CoinVertible (EURCV):

Characteristics:

• Stablecoin pegged 1:1 to the euro
• Reserved for institutional and verified investors
• Usable for tokenized operation settlement
• MiCA compliant (e-money license pending)

3. Major Institutional Issuances

EIB, Siemens, Republic of Slovenia: the first issuances making history.

European Investment Bank (EIB)

The EIB conducted several pioneering issuances:

April 2021 issuance:

• Amount: €100 million
• Maturity: 2 years
• Lead managers: Goldman Sachs, Santander, Société Générale
• Blockchain: Private Ethereum (consortium)
• Settlement: In traditional euros

Lessons learned:

• Issuance timeline reduced from 5 days to a few hours
• Automatic synchronization between parties
• Transparency for all participants
• Interoperability to improve (no active secondary market)

Siemens: Corporate Bond on Polygon

In February 2023, Siemens issued the first digital bond by a German corporation:

Characteristics:

• Amount: €60 million
• Maturity: 1 year
• Blockchain: Polygon (Ethereum Layer 2)
• Settlement: Euros (not stablecoins)

Significance:

• Industrial sector adoption
• Polygon chosen for cost efficiency
• Hybrid model (blockchain + TradFi)

Other Notable Issuances

4. Advantages of Bond Tokenization

Issuers and investors both win: the concrete benefits of tokenization.

For Issuers

Issuance cost reduction:

For Investors

Operational advantages:

• Instant settlement (no T+2 immobilization)
• Automatic coupon payments
• Transparency on holders and flows
• Fractioning enabling diversification

Strategic advantages:

• Access to previously institutional-only issuances
• Potentially increased liquidity (24/7 secondary market)
• DeFi composability (collateral, lending)

5. Regulatory Framework

Blockchain ordinance, DLT pilot regime: the French legal framework decoded.

French Law: Tokenized Bonds = Financial Securities

Legal basis:

Tokenized bonds are financial securities under Article L. 211-1 of the Monetary and Financial Code. They benefit from the 2017 blockchain ordinance:

"Registration in a shared electronic recording device serves as account registration." — Article L. 211-3 CMF

Regulatory Requirements

DLT Pilot Regime

EU Regulation 2022/858 creates an experimental framework:

Authorized infrastructures:

• DLT MTF: blockchain trading platform
• DLT SS: blockchain settlement system
• DLT TSS: combination of both

Bond thresholds:

• Max capitalization per issuance: €1 billion
• Total assets: €6 billion

MiCA and Tokenized Bonds

MiCA does NOT apply to security tokens (including bonds):

"This regulation does not apply to crypto-assets that constitute financial instruments within the meaning of Directive 2014/65/EU." — Article 2, MiCA Regulation

Tokenized bonds remain under MiFID II, the Prospectus Regulation, and MAR.

6. On-Chain Issuance Process

From structuring to redemption: the complete lifecycle of a tokenized bond.

Steps of a Tokenized Bond Issuance

Phase 1: Structuring (D-30 to D-15)

1. Define terms (amount, maturity, coupon)
2. Choose blockchain and token standard
3. Draft legal documentation
4. AMF approval if prospectus required

Phase 2: Technical Development (D-15 to D-5)

1. Smart contract development
2. Security audit
3. Testnet testing
4. Investor whitelist (KYC)

Phase 3: Issuance (D-0)

1. Smart contract deployment
2. Funds reception (fiat or stablecoins)
3. Token distribution to investors
4. Registry recording

Phase 4: Bond Life

1. Automatic coupon payments
2. Whitelist updates (transfers)
3. Investor reporting
4. Redemption at maturity

Token Standards for Bonds

ERC-3643 (formerly T-REX):

• Open-source standard for security tokens
• Integrated compliance (on-chain KYC)
• Used by Tokeny and several issuers
• Compatible with European regulation

Blockchain Selection

7. Secondary Market and Liquidity

The promise of 24/7 liquidity versus market reality.

Current State of the Secondary Market

2025 Reality: The secondary market for tokenized bonds remains limited. Most issuances are held to maturity by initial subscribers.

Obstacles to liquidity:

• No operational DLT MTF in France
• Still restricted investor base
• Limited interoperability between issuances
• Institutional investor habits

Developments in Progress

8. Investing in Tokenized Bonds

How to access tokenized bonds when you're not an institution.

Access for Retail Investors

Current reality: Most tokenized bond issuances are reserved for institutional or professional investors:

Accessible Alternatives

1. Tokenized Treasury Bills (T-Bills):

• Ondo Finance (OUSG, USDY)
• Franklin Templeton (BENJI)
• Matrixdock, Backed
• Accessible to accredited investors

2. Indirect Exposure:

• sDAI (MakerDAO): RWA exposure including bonds
• Yield-bearing stablecoins incorporating bonds

3. DeFi Credit Protocols:

• Centrifuge: tokenized receivables (close to bonds)
• Maple Finance: institutional loans

9. Tokenized Treasury Bills: A New Asset Class

From $100 million to $5 billion: the explosion of T-Bills on blockchain.

Emergence of Tokenized T-Bills

Tokenized US Treasury bills represent the most dynamic RWA category:

Market growth:

Key Products

Tax Treatment for French Investors

• Interest: Foreign debt income
• Possible US withholding (15% treaty rate)
• France taxation: 30% PFU flat tax + tax credit
• Declaration: Forms 2047, 2042, 3916-bis

10. Outlook and Evolution

$4 trillion tokenized by 2030: realistic scenario or optimistic projection?

Trends 2025-2030

1. Accelerated institutionalization — Major banks as regular issuers
2. Mature secondary market — Operational DLT MTFs, increased liquidity
3. Interoperability — Common standards, secure cross-chain bridges
4. Issuer expansion — SMEs, local governments, diverse sovereigns

Market Projections

Challenges to Overcome

1. Interoperability: Silos between issuances and blockchains
2. Liquidity: Secondary market development needed
3. Regulation: International harmonization
4. Adoption: Changing institutional habits
5. Infrastructure: Scalability, costs

11. FAQ

Are tokenized bonds riskier than traditional bonds?

Credit risk (issuer default) is identical. Tokenized bonds add technical risks (smart contract, blockchain) but eliminate certain operational risks (settlement failure). For issuances by reputable institutions (SG, EIB), the additional risk is low.

Can I buy SG-Forge tokenized bonds as a retail investor?

No, currently SG-Forge issuances are reserved for institutional investors. Retail investors can access tokenized Treasury bills via platforms like Ondo Finance (with KYC and minimums).

On which blockchain are tokenized bonds issued?

Choices vary: Ethereum (SG-Forge, EIB), Polygon (Siemens), Tezos (OAT), or private blockchains. Ethereum remains dominant for public issuances, private blockchains for internal bank experiments.

Are coupons really paid automatically?

Yes, the smart contract can automate coupon payments at the scheduled date. Payment can be in stablecoins (EURCV) or traditional currency depending on the structure.

Are tokenized bonds covered by MiCA?

No, MiCA explicitly excludes financial instruments (including bonds). Tokenized bonds remain under MiFID II, the Prospectus Regulation, and existing securities market rules.

Conclusion

Tokenized bonds embody the convergence of traditional finance and blockchain. SG-Forge and European institutions have demonstrated technical and legal feasibility. The market is now evolving toward maturity with secondary infrastructure development and new issuer entry.

Key takeaways:

1. Proven technology: Successful issuances by SG-Forge, EIB, Siemens
2. Established legal framework: Blockchain ordinance, DLT pilot regime
3. Real advantages: Reduced costs, instant settlement, automation
4. Limited access: Primarily institutional for corporate bonds
5. Accessible alternative: Tokenized T-Bills (Ondo, etc.) for qualified investors
6. Promising outlook: Multi-trillion market by 2030

Article updated December 2025. Information is educational and does not constitute investment advice. Consult a qualified professional before investing.