Mt. Pelerin disrupting investment banking
Arnaud Salomon’s unique background and insatiable curiosity have him a path to disrupt investment banking. Mr. Salomon is the founder and CEO of Mt. Pelerin, a bank that also helps companies with every step (or just some) of their own security token offering (STO). They can custom design security tokens, smart contracts and investor dashboards.
An authorized financial intermediary, Mt. Pelerin conducts KYC and AML checks. Based in Geneva, Mt. Pelerin can introduce companies to the Swiss banking system, offers currency exchange services, collects fiat funds and sends bank wires. Eventually Mt. Pelerin will be a fully compliant and regulated bank on the blockchain, where the entire balance sheet will be tokenized. Its bridging of traditional finance and cryptocommerce will provide crucial access to the new economy.
An engineer by training, Mr. Salomon has spent his entirecareer in finance before starting Mt. Pelerin close to four years ago. He wasfirst introduced to blockchain technology whilst a junior trader in 2008 andadmits he was mystified by it. Then the engineer in him took over and beganasking questions to which there were few good answers.
So he set out to find those answers and began asking himself some theoretical questions along the way. What is money? Why does it earn interest? Mr. Salomon studied Friedrich Hayek and other figures from the Austrian school and found many libertarians asking the same questions about who decides how money is created and disbursed.
“People don’t question inflation like it’s gravity,” Mr.Salomon noted. “It’s a human not a natural fact.”
Bitcoin was a huge revelation for Mr. Salomon. It answered most of his value creation questions and was designed to foster trust and true peer-to-peer interaction, he saidd. Then came Ethereum which offered smart contract capability. Soon Mr. Salomon was considering leaving a lucrative career to found Mt. Pelerin.
With improvements coming quickly in blockchain technology,Mr. Salomon wanted his system to be blockchain agnostic so it could migrate toanother chain if the need arises or a better solution appears. That can bewritten into the smart contract.
Mt. Pelerin bills itself as a new bank for a new economy.While not yet licensed as such by Swiss authorities, they will be able to hitthe ground running when that day comes. Their framework allows clients totransact in any type of banking asset while remaining compliant with regulations.By adding compliance layers on top of Ethereum, they can add rules to guide alltransactions.
It will be a full reserve bank so it is protected should a runoccur, Mr. Salomon said. Its revenue model is based on bringing value addedservices offered on a marketplace. Costs are reduced through asset tokenizationwhich also brings added liquidity.
And as befitting a fintech, initial registration is simple,Mr. Salomon said.
“You can sign up in eight minutes, and digitally scan yourpassport. We check for sanctions during the onboarding and have a short videocall for three to five minutes.”
Those accounts are designed with a master IBAN and up to 30+2dedicated IBANS matched to 30 fiat currencies (and later BTC and ETH). Thatallows for quick conversion between currencies.
Mt. Pelerin’s marketplace allows customers to save money byhaving service providers compete for a client’s business, Mr. Salomon explained.If a client does not like any available currency exchanges, they can proposetheir own.
Tokenizing all assets is the most important part of Mt.Pelerin’s strategy, Mr. Salomon said. Tokenization makes all assets highlyliquid, easily tradeable and trackable. All assets will be issued as ERC20tokens.
Every banking asset is already a contract, so just make thema smart contract, Mr. Salomon said. Programming is automated and that simplifiestransactions through increased liquidity. Illiquid assets are costly for banksto maintain so they are packaged together to reduce maintenance costs (soundfamiliar?). But when assets are tokenized, the smart contracts simplifypayments to the asset’s rightful owner. That also helps clients identify risk andensure the opportunity matches their appetite.
Mt. Pelerin designed their systems from scratch after Mr.Salomon kept seeing the same problems with existing banks, he said. Most hadtheir core systems running on three different vendors. Should they decide tomigrate systems, it was a huge task.
Not for Mt. Pelerin, because of its microservicearchitecture where each service is like its own brick, Mr. Salomon explained.While those bricks can still communicate with each other via a centralized rulesengine, upgrading is simple as only the affected brick needs to be removed.
Mt. Pelerin is growing at am important time in Swiss finance, Mr. Salomon said. The country needs to reinvent itself and sees blockchain startups as a key player in the its future. Mt. Pelerin has shown them regulators’ strict expectations can be met through the system’s rules engine.
“That is very reassuring to them,” Mr. Salomon said. “They never over-regulate, what is done is done in good will.”