BNP Paribas Securities Services has provided the custody for a proof of concept (PoC) that involved mutual fund transfers on a blockchain-based platform provided by German startup Fundsonchain.
The pilot also involved German financial services firm MEAG as the regulated firm and IT services firm Ergo as the institutional investor with BNPP SS acting as the custodian and digital asset securities register manager.
The use of distributed ledger technology (DLT) has long been seen as a way fully digitise fund processing and to minimise errors and exceptions by using a DLT-based register as a single source of truth.
Such an approach is vital to ensuring crypto funds can be successfully and securely processed.
"We started with Fundsonchain to make the digital transformation of the fund industry a reality," said Volker Braunberger, CEO and co-founder of Fundsonchain, about the PoC.
The transaction is not the first PoC using blockchain for funds processing. In October last year, Swiss fund manager UBS Asset Management completed a pilot using the FundsDLT platform for funds distribution.
And in December, Axa Investment Management completed its first market transaction on the blockchain – buying €3 million of unsecured bonds from Societe Generale in the form of security tokens.