CVA Podcast: Arnaud Salomon, Mt Pelerin

Transcript

[Music] hello hello this is shiraz ahmed back at it again with another bite-sized episode of the crypto valley association podcast let's discover together the growing trends of this fast-moving space and try to shed some light on the mysteries it contains we are joined today by arnold salamon founder and ceo of montpellhan who are building the infrastructure for tomorrow's finance and are claimed to be the first company in switzerland to issue shares in the form of digital tokens so let's dive straight into the hidden world of digital finance how is everything with you today hi charles nice to be with you today

thank you yes and it's wonderful to have you here as well why don't you tell us a little bit to begin with you about your first encounter with blockchain technology yeah i mean obviously it was bitcoin i believe the first time i've heard about bitcoin was in 2011 it was a colleague of mine who actually told me about it when it passed the one dollar level and it was interesting but i didn't pay too much too much attention at the time and then i kind of you know forget about it for like almost a year and then in 2012 it was with another friend from school where i for whatever reason we started to discuss about bitcoin and then we started to

research on the terrace of wikipedia with bitcoin and discussing and exchanging and then we ended up late at night at his place drinking and searching more and from there it was uh yeah it became a love story it's good to hear we always feel like it's uh we're more geeky friends that get us involved into the technology and then we partner up with them to to make something bigger and so is it from that that montpella was born not really so here i was still working within a company as a regular employee but then somehow obviously you know that like i started my career back in 2008 in the middle of the crisis the subprime crisis and i started my career as a junior trader so

i was always asking questions you know around what is money why does it bear an interest rate why is it essentially planned and not decided by the market and all those things yeah so for me obviously these were important topics in my life but at the same time already had a job etc but at some point we started with a friend of mine we started to work on the side deal we started a company a commodity trading company and it started to generate me enough time to think about other things and that's how pretty much mobile was born originally it was just an idea and to be honest it really really started back in 2017.

okay great and maybe you can tell us a little bit more about what mobilhan does and the role that it has within this growing industry yeah sure so montpella is today very specialized into asset tokenization we've built something that we are quite proud of technically speaking which is called a bridge protocol it's basically a rule engine and a user registry that runs on ethereum that allows to enrich any erc20 in order to remain compliant with securities law so the idea is really to get rid of the so-called whitelist that is used today by security tokens to tackle the secondary market problem and here the buy it's very binary right so like a waitlist it's either you're in or you're out

you have to be in this waitlist before you can even own such a token so it's not really there is not that much granularity into it what we came up with is a framework to replicate the exact regulatory rules that exist today and that banks and financial institutions are applying to themselves centrally and to be able to apply that on the token and the token being the technological vehicle yeah so the token is just technological vehicle and that you can program and what really matter is the underlying assets that you're incorporating into this token so if the asset is under method rules you have to make sure that the owner of such token has the correct risk profile yeah he's a risk averse risk taker

he's a financially savvy enough et cetera et cetera so you can put a list of rules so you can restrict the transferability based on amount amount of a rolling period of time you can put thresholds where transactions on chain or post and trigger a notification to the back office of the issuer so that he can document for example the origin of the fund the economical context to comply with the aml rules et cetera et cetera but the beauty of it is that you can create a real meaning that within this realm you aggregate the compliance view over multiple tokens issuance yeah so that means that for example if you issue a euro token and a swiss franc token it doesn't mean that it should develop the limit of each and every customers yeah so that's the point

of the the bridge protocol that is actually to really the goal of that is at some point to be able to bring the entire balance sheet of a financial institution in real time on the blockchain and the idea obviously is very simple is that people can take delivery of those financial assets which are contracts onto their own addresses etc and they can freely trade within this decentralized ecosystem so this is this is our view okay okay and so following that point so if i understood correctly do you create personalized rules then or groupings for each uh in investor or each person on your platform that's using the

protocol or is this grouped up into multiple different tiers so it basically it's flexible yeah so you can do whatever you want as an issue so we have a front-end issuer can do it for free so it's an open source thing so meaning that they can go on the front end they can if you know for example to tokenize shares of a company this is a very simple straightforward process that costs like almost zero i mean to be honest it's a very cheap process to tokenize the swiss company today it's a control c control v event and on this front end you can actually go you can put the name of your company the symbol and then you can say like okay i want to create lot one which is a private sale so it's like 10 000 shares at five francs and then you can create a public sale from this

date to this date at six francs or something like that you click on generate you plug the trezor so this is where you manage the operational keys you validate and within 15 blocks it deploys everything so technically speaking it's like very easy and straightforward obviously you can add rules because at the end of the day depending so here we talk about shares so shares in switzerland it's the beautiful thing is that we can make it freely transferable we can explain you why later on but we can make it free transferable but sometimes some entrepreneur they like to add some rules on specific lot of shares for example because they are binded under a shareholder agreement you know and therefore you need to tag a loan drag a loan rights maybe you have some specific conditions in the contract with these specific investors etc etc

so this is where you can actually add the rules the transferability rules and also allow for example to give back the ownership to someone who has lost access to his shares yeah so somehow in the regulated world it's not because you delete your wallet but that you're not a shareholder anymore so we should have to offer the opportunity for those people to get back ownership etc etc oh wow okay that's definitely quite revolutionary in the space maybe you can tell our audience a little bit more about what all this hype is about because there's been so much hype over the past couple of months even years about security tokens would you like to delve into that a little bit yeah obviously i mean at the end of the day again every banking assets every financial assets or

contracts yeah so i mean the idea of incorporating it into financial contracts at least to make the simple use of those contracts to automate the life cycle of it uh makes totally sense if you look at it as a trading company for example as a bank or as any type of institution you actually do not trust any other parties in the market and therefore you run your own ledger and everyone runs their own bedroom that means that for one trader which is the center of profit you have 10 cents of cost middle office back office risk reporting settlement netting confirmation reconciliation and all those departments exists simply because you need to reconcile those ledgers and that's why it takes time to have the settlements et cetera et cetera

now what we try to teach as well institutions is that if they agree on the mobilization of such a contract not in their own core banking system but within the form of a smart contract actually you can program to have trading and sentiment happening at the same time but you can also decide not to to have like maybe a delay of six hours because you want to have meetings among participants etc etc but i mean whatever you think of can be actually kind of pulled you know so i mean like the resources of the back office can now be shared amongst the participants and reduce drastically the operational cost for institutions and that's why it makes really sense and on top of it obviously with all those compliance rules that you can add you can broaden up the accessibility to such assets

directly to the end user to the crowd without having to go through those investment banks without having to go through investment advisor family offices etc so it's really a way to democratize access to existing assets okay and you spoke about the bridge protocol what other applications have you brought out on top of that is there anything new that you're looking for obviously i mean the bridge protocol is a geeky thing it's a set of small contracts so the idea right now is to have tools on top of it that can interact with the bridge protocol so obviously as i told you there are the front ends for the issuer we are creating a cockpit for any company to manage actually it's capable on chain and to trigger the corporate actions events

that the company needs such as paying dividends triggering votes as well as you know having some events like stock split or capital increase or whatever you know so we're creating really the digital cockpit for any ag sa swiss company to manage the capital on chain in a very easy way even like you know if you want to give shares to employees but you want to have a vesting period over it because you don't want them to leave the next day you give them shares so you have maybe a three year version period and or even cliff and things like that so you can have pretty much all the rules you want and it's really creating this cockpit for the entrepreneurs to manage its least capital on chain and really for us it's a game changing thing because when you blur the line by having like the newly

formed startup to have shares that can be distributed to the crowd that can be traded peer-to-peer versus the publicly listed companies such as nestle and novartis that obviously have a quote on their shares but done by the six exchange here you can have the same thing happening on the newly formed startup and the entrepreneur also by fundraising through the crowd is also an interesting aspect because the crowd is not only your contributor it's also becoming your ambassador yeah and as a newly formed project it's very interesting to have a crowd of people that are actually behind the company spreading the word to their friends to their families et cetera et cetera so it's a really triple win situation here so now we are creating also new front ends for the end

user yeah so we have come up with a wallet which is a very traditional simple one it's an erc20 compatible wallet obviously we have enriched it with the functionalities of the bridge protocol so that it becomes human readable you know for the user when they have to give some information about this and that or to pass the kyc the onboarding process they can choose to do it with mobile with other providers depending on the issuer who has chosen you know which compliance oracle he wants to use everybody can be a compliance oracle so we have enriched that to have the life cycle management easy on the customer on the end user way and what we did like couple of weeks ago was to run our first annual general meeting so this is the

general assembly where the board meets the investors and explain the numbers and present the annual report present the plans for the future as well as doing the the votes such as do you accept the uh the financials the the annual report as well as the election of the board et cetera et cetera and we did that into the wallet itself meaning that people would click on the mps token so the mps is the mobile house shares and they would access to a virtual room so it was a live stream directly within the wallet so i was the one as the president of the company to present all the numbers and the annual report and everything and then conducted the vote directly on the blockchain depending on the amount of shares you own yeah so you have a power of voting depending on the

amount you have and on each and every topic people could vote directly on the blockchain so the blockchain was not used just as a proxy to recall the vote but it was really the voting system onto the blockchain and we did with that to prove that actually you can run fully digitally the company today and there is no more obstacles to as an entrepreneur to not use that tool anymore well it's the digitalization of everything practically yeah wow and so do you see more companies moving to that side where they're able to use blockchain really in their everyday lives to be honest it's still early stage today yeah so there is still a lot of education around blockchain uh some people still confuse blockchain

with cryptocurrencies and some people even like tend to associate it to darknet and bad things and you know there are still you know it will take a little bit more time until we are absolutely sure that within 15 years time 10 years time it will be the norm and even companies in switzerland when the company will incorporate it will incorporate directly onto the blockchain today that's not the case obviously today the company are created traditionally and then you can incorporate your shares into tokens but in the future we believe it will be so much the norm that even the commercial registries will offer that possibility okay and you mentioned so to have the global adoption of blockchain technology we need to go by education and to do so

you mentioned that it's time factor right so we just need more time to go by five ten years but do you believe that there are other factors that can help the educational side is there anything that other companies or is there even stuff that is doing to further educate these audiences yeah and i believe that the right direction today is uh simplification so the education will come through simplification because today the barrier to entry is high for a lot of people you know like if i take my mother and i tell them look i have a wallet here you can have stable coins and you can pay in tokenize dollar euro whatever and can even invest in bitcoins uh

every month a little bit and this that it's fine you know she might understand but at the end of the day when she will know the wallet and then she will realize that if she does something wrong she can lose everything and there is a lot of simplicity to go around that now that's why there is also a need to have regulated financial institutions to bridge the gap here and to offer really this bridge that's why we call it bridge right so our view here is that it's important to breach the two worlds um the traditional world that as we know it it's called ibands you know the traditional bank accounts as well as the blockchain world where it's called addresses at the end the two things are the same it's a routing system and now

you know by bringing those two into a single wallet which is what we're doing now with the bridge protocol with the bridge wallet sorry it's really what we believe the way forward and then abstracting the notion of keys management and backups etc so obviously we want to encourage people to be fully decentralized meaning not your keys not your asset so owning their own keys on their own device is important but at the same time offering a secure backup by an institutions that is like bank grade or that has really good processes and to obviously better than the single user is also a must okay and so when you talk about bridging the gap between technology and the everyday individual do you mean

in a centralized way so with a central entity as you said that has bank level custodianship or even interface or do you believe that the decentralized approach could work as well no i mean the idea is to have both so there are gateways there are gateways that are centralized and the idea is to have all those gateways to work on the decentralized ecosystem meaning that people can choose to use one gateway or another to use one company or another et cetera et cetera and at the end of the day people could choose to delegate the key management to several of those actors in order to split the risk etc etc so it's really decentralization is not only about smart contract which obviously is strongly

encouraged but at the same time if we can have company to bridge the traditional world with the blockchain world that's obviously centralized yeah but this is required and needed in order to bring onboard those people to the decentralized world to be able to swap euro for dollar in a tokenized way in the swap of the term and you know in order to bring the people into that ecosystem we need to have those bridges okay see and so you spoke about five ten years down the line where do you see the future of the blockchain space headed then that's a very good question i do not have the crystal but to be honest what we hope is that it will be a rail let's call it this way a rail that is used by financial institutions in order to exchange assets yeah that's

what we believe that's what we want to achieve also to really be able to have the choice to swap assets on different rails yeah whether it's different blockchain realms yeah it can be on ethereum on any other type competitor to ethereum but also on the traditional way with central registered and you know like in for the explainable for securities it's called izing you know like the eisen number it's like the address of of an asset on chain and actually you can bridge those two worlds yeah and that's really here where we believe that the financial institutions have a lot to gain by adopting this technology but obviously it will come only if there is an agreed standard and today the problem is that there are

so many initiatives everywhere everyone coming with their own way of doing things and somehow there is also the ego of the institutions all of them wants to push their own solutions and so we need to find a way to have a proper interoperability amongst all those initiatives but i believe that we will get there in the future okay well i hope so too and i'm quite confident that we will there may be one other element so you spoke about the financial institution side and of course you are a thought leader within that specific sector but do you see any other sectors being disrupted in the future by blockchain technology that's a good question yeah i mean you see that everywhere there are initiatives to tokenize art or initiatives to tokenize cars or

initiatives to tokenize collectibles in general as well as obviously real estate uh the example of realty is beautiful you know what realty have achieved to be honest this is amazing because they were the first one to actually have tokenized real estate and they're still the only one today and because all the other ones that we see today on the market that came oh we did tokenize this and we did uh tokenize that and look somewhere about this and that and at the end of the day all those guys achieved is to issue an erc token that is owned by three people and they were you know the issuer were friends with the buyer and they have all make a big event in the press and the news about we did that but at the end of the day excel would do a better job you know if

it's only limited to your friends and you know copy pasting basically the trades you've always done with them since 20 years and now claiming there is a token in the middle what realty has achieved is really democratization so what they have today is a crowd of people owning houses and they receive yields and yield this paid on a daily basis and this is really like you know they are really thinking forward you know not not replicating anything you know that we know today but really to push it further you know like to stream the cash flow to the owner of the asset except yeah that's definitely another great use case and there's so many to combo thank you so much it's been very very interesting i don't know do you have any final words that you'd like to share with our audience today yeah we believe

that today this industry is still new but it's worse spending a bit of time reading and educating yourself but again for every entrepreneur today whether he's in the blockchain space or not we strongly encourage anyone to tokenize their shares and to manage their capital balance chain really today this is something that is not complex that can be done on the legal side on the tech side it can be done in one day yeah so it's it's really very easy to do and we strongly encourage everyone because you have nothing to it doesn't change everything to you it's still the same shares the people to whom you will sell it can be either the crowd or the vcs or the uh or your friends and family or the business engineer is still the same

share so whether the technological vehicle is not excel anymore but it's the blockchain and to represent it by tokens it doesn't change anything yeah and now we are also bringing the next step and this is something that we will announce in the middle of august it's to be able to bridge also this two world of icing shares you know the shares that can be listed on the sixth exchange or any books in in europe as well as having the shares in the form of tokens so that the company can have shares in two forms you know they really like the traditional financial form and the tokenized form yeah and the tokenized form obviously is you can be distributed broader way to directly to the public whereas the eisen is more through institutions and for

institutions which is also interesting because obviously family offices and some other investors traditional investors they want to book it in their own booking system traditional booking systems to have the reporting and accounting to be still the same they don't want to own tokens necessarily because they wouldn't know how to deal with that and where to store it etc so we can really bridge the gap today and we strongly encourage everyone to store it with organizing their company all right well get through it right get to tokenizing now your company i have to agree with you that i think it's a great way forward and it's it's wonderful to have you i wanna also it's inexpensive i want to stress that point because like we heard people coming to us saying yeah i had a quote from this company and it was about

100k to tokenize my company what the hell you know so issuing on your c20 is free yeah so you can use the bridge protocol you can use anything else it's free then the legal setup they can come to us we can explain it's going to be very cheap the only thing that will take a bit of time is the update at the commercial registry because you need to add new articles in the bio of the company but that's it you know that's that's the biggest complexity here okay well cheap and efficient right it's it's the entrepreneur's dream exactly so well okay great well hopefully we were able to shed some light on the hidden world of digital finance today and well if you enjoyed this conversation feel free to check out

more on our website cryptovalley.swiss where we host plenty of events educational content and even provide information on how you can join our growing community so thanks again arnold for joining us stay tuned stay safe and until next time [Music]