Banks dive into DeFi 🤿

GM, Tim here.

Banks are experimenting with stablecoins amidst a wave of crypto hype that’s washing over traditional finance.

Now Société Générale, one of Europe’s largest banks, is upping the ante by diving into DeFi.

Its digital assets arm, SG Forge, has just integrated its euro and dollar stablecoins with Uniswap, the largest decentralised exchange with over $100 billion in monthly trading volume, and Morpho, the second-biggest lending protocol with $11 billion in deposits.

The bank’s institutional customers will be able to swap between the USDCV and EURCV stablecoins and other crypto assets on Uniswap, then lend and borrow against them through vaults on Morpho. 

It’s among the first instances of a bank moving beyond pilots to actively use DeFi infrastructure, and comes as crypto lending solidifies itself as the dominant onchain use case.

In early September, deposits to DeFi lending protocols soared to an all-time high of $130 billion, according to DefiLlama data.

Major lending protocols like Aave, Morpho, and Euler have become liquidity magnets amid the sector’s expansion, generating huge earnings from transaction fees.

Société Générale has been DeFi-curious for a while. 

As early as 2021, the French bank proposed using its securities as collateral to take out loans through DeFi lender Sky, formerly MakerDAO.

Société Générale then issued its regulated USDCV and EURCV stablecoins on the Ethereum and Solana blockchains in 2023.

It’s not just Société Générale that’s getting in on the action. 

In 2023, global investment bank Credit Suisse backed Taurus, a digital asset custody firm that helps Wall Street firms tokenise assets on public blockchains.

In December, British multinational bank Standard Chartered partnered with stablecoin issuer Paxos as part of its tokenisation push. 

The developments come as crypto regulation across the globe makes banks more comfortable dealing with digital assets.

The European Union’s MiCA rules came fully into effect in June last year, while the US just passed landmark stablecoin regulation in July. 

Future regulation, like the planned market structure bill in the US, should give banks even more confidence to explore DeFi initiatives — although it may be delayed due to the looming government shutdown. 

If all goes well, Société Générale’s integrations with Morpho and Uniswap could set a model for how more banks could adopt DeFi in the future.

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DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

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