Mt Pelerin and the Bridge Protocol: building the legal basis and infrastructure for the tokenization of financial assets

Mt Pelerin, a Swiss startup based in Geneva, has made the first issuance of tokenized shares in accordance with Swiss law, with the ultimate goal of establishing itself as the first bank 100% tokenized. It is a whole innovation in financial matters. And although we have become accustomed to hearing that a company “tokenizes” something, in reality the issue is not so simple, and requires some context to understand what Mt Pelerin has achieved.

The security tokens, those that represent an underlying financial asset, are the new great promise in the crypto ecosystem. However, it is still not entirely clear how to properly structure the public offerings of security tokens, or STO (Security Tokens Offering). Most projects to date have tried to create private contracts between buyer and seller of the token that replicate the behavior of a financial asset, and in particular of the action of a company with all associated rights (share in company profits and right to vote in his government).

However, this approach has brought legal uncertainty and not a few problems, since a private contract, although simulating the behavior of an action or participation of a company, does not really replace the ownership of the title in question. It is not a trivial matter, since it involves legal complications depending on the jurisdiction.

Mt Pelerin has solved this problem in Switzerland by building a protocol, the Bridge Protocol, which allows the tokenization of shares, so that the possession of a token implies the possession of an action of the company that issues them. Therefore, any token owner is a shareholder, with voting rights and dividend distribution, and is protected as such by Swiss law. The protocol also allows managing the life of the token, so that it reflects any change in ownership or in the rights granted by it. The construction of this first bridge between the traditional financial world and the crypto ecosystem has been possible thanks to the collaboration with the authorities of the Canton of Geneva, where the company is located, and the Capital Markets and Technology Association.

What does this mean for investors in particular, and the financial business in general? Until now, investors in startups had an illiquid asset: the action of a company that can not be bought or sold in traditional financial markets, whose access is impossible for most companies. As a result, the return on investment used to come after several years, when the company began to have benefits (if they came). The legal tokenization of actions, as is now possible with the Bridge Protocol, solves this problem, since the blockchain becomes a de facto secondary market in which the shares can be easily sold and bought.

As a next step to the creation of the Bridge Protocol, Mt Pelerin has tokenized the actions of his company during a first round of financing. Its short-term objective is to obtain the license of the Swiss authorities to become the first bank on the blockchain, with the entire balance tokenized. It has also opened the Bridge Protocol code, perhaps the most advanced technical framework to date for the legal issuance of financial instruments in the blockchain. The objective is to help the business world to take the first step and benefit from the enormous potential of the tokenized actions, without having to travel the long and expensive road traveled by Mt Pelerin.

 

 

Enric Martí

Economy fan, hangued, hooked on crytocurrencies and junkie of audiovisual stuff…on rehab

Enric Martí

Enric Martí

Economy fan, hangued, hooked on crytocurrencies and junkie of audiovisual stuff...on rehab