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The surge in open finance on top of Ethereum has become one of the prevailing narratives for the cryptocurrency market in 2019. The flood of funds that poured into open lending protocols caused some current growing pains with the likes of MakerDAO, but startups in the space have continued to explore the convergence of conventional financial structures and blockchains.

With more than 100 projects currently pioneering financial innovation on Ethereum, from derivatives products to prediction markets, teams in the space are focusing on empowering individuals to engage with a new financial system. One of the companies leading the charge into tokenization of financial assets is Mt Pelerin, a company from Switzerland who is building a full-fledged bank on its own open-source compliant tokenization framework working on top of the Ethereum network and other compatible blockchains.

The concept is to create a durable tokenization infrastructure to bring an entire bank’s balance sheet on chain — including everything from markets for futures and derivatives to savings accounts. Mt Pelerin unveiled the beginnings of their effort with their open-source tokenization framework late last summer, the firm’s protocol for issuing regulatory-compliant tokenized securities on the blockchain.

 

Mt Pelerin even tokenized shares of their own company, with the tokens being the first of their kind for the industry providing full share ownership. Now, the company has announced its one-stop shop professional services that will complement the tokenization framework with conventional financial services.

Blending Conventional and Open Finance

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Despite the enthusiasm with which the broader cryptocurrency community approaches open finance, there are some significant hurdles to overcome before it reaches mainstream reality. In particular, banks and other financial institutions are intrigued by many of the benefits offered by digital assets on blockchains but remain hesitant to cede control to them entirely.

Moreover, financial entities are accustomed to the market-making and expertise of Wall Street, and foregoing traditional services that are critical to the industry, such as legal consulting and custodial services, seems unlikely — at least in the short-term. Tasks that can be automated or benefit directly from tokenized assets, such as underwriting, brokerage, or redundant administrative tasks are a different story, however.

The disruption caused by blockchains and tokenized assets will assuredly be profound in the long-run, but for now the market awaits for the initial spark that will drive adoption. Aware of this, Mt Pelerin believes that a seamless and simple experience is key. As a result, the firm has developed a one-stop shop service for companies to enter the world of tokenized securities effortlessly.

“As an authorized financial intermediary in Switzerland, we can offer professional services concerning tokenization that other issuance platforms rely on service providers to serve,” says Mt Pelerin Founder and CEO, Arnaud Salomon. “Examples of services that we offer for startups and companies looking to leverage our tokenization technology include technical development, consulting, document templates, fiat currency escrow accounts and comprehensive KYC/AML compliance, all with highly competitive pricing.”

Security token issuance platforms such as Polymath or Harbor are very market-specific ecosystems that serve an explicit type of client. Entry costs are often high, lead times are long, and turning to third party service providers is typically required for legal compliance, underwriting, brokerage, and more.

Mt Pelerin taps into the power of its tokenization framework to circumvent the high costs and inconvenience of such a dynamic.

“The tokenization framework enables cross-asset compliance,” says Salomon. “This means that the code that manages the regulatory compliance of a token is independent of the actual token and can be refined across various users and tokens — it is much more flexible and scalable.”

The advantages of the tokenization framework aside, companies often have trouble grappling with the concept of tokenized assets and how to go about their issuance. Especially with small and medium enterprises (SMEs) who have been largely precluded from accessing traditional financial markets, the technical and legal hurdles can seem daunting.

“With our financial intermediary authorization, we have a unique capability to offer a full-scope service to help companies do their own tokenization or issuance offering,” says Salomon, “We want to make the whole process easy and accessible to anyone”.

Being embedded in the Swiss financial sector assuredly has its advantages, as it has long been a financial regulatory haven. But the real spark for open finance is in Mt Pelerin’s hybrid approach.

“Mt Pelerin’s protocol is the best candidate to establish a tokenization standard,” says Salomon. “The protocol is open-source and available for anyone to use, but for companies that wouldn’t have the time and/or tech skills to use it by themselves, we can assist them in achieving their specific needs.”

A one-stop shop for tokenized security issuance, life cycle management and professional services is an appealing development for both larger financial institutions and smaller enterprises. With so many projects striving for market-specific open financial tools, Mt Pelerin separates itself from the crowd with a complete approach to standardization — a blend of the old and the new.


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