Cyril Lapinte - Mt Pelerin - Ethereum London

let's try so the topic is the road to have chain regulations and the company is maintainer so first let's introduce myself so I'm Sheila pant and I'm the CTO of a project which is called mallanna I'm by ground as a software engineer different kind of stuff and I'm also a lot involved into social meetups some conference like in two days you have the a jet to London and this is my timeline about blockchain and you can see I joined the space a bit late compared to somebody and I've already in London about a tracking record of election achievements so I'm working at Machpelah in a start-up so let's started a little bit of of politics because at the end at the core blockchain it's about politics I asked some voicing disagreement wallet well disk is that so do you believe in blocks in value so what are those values you have the economic values that beneath this this ecosystem at the origin you have Adam Smith may be familiar in London but the guy called Adam Smith and you have the idea of free and open markets private ownership of capital values and also individual contracts already this guy for me economically barrier they are talking of contracts but we write a check I know an authority is needed to define regulate and enforce rules so in the blockchain space you don't have necessarily a it's self regulated so it's a consensus the authorities a consensus but this authority of consensus cut applied outside the block chain space so if you have a real use case words you can't have the blockchain enforcing its you need someone that will go in the real worlds to help you and force what has been defined on the blockchain if you were to consider blockchain as a primary ledger now let's talk about unchecked governance and regulation so and I said well one must follow existing governance and regulations and in the real world you have governments and you have an administration that will run the system based on the government decision you have basic rules which are you don't still the guy next to you you don't try to learn the money and you have many more rules that you probably already very familiar with even if you're not a blockchain people on the other side on the blockchain space you have different set of rules but you have also a set of rules you have - and nuts will run the system and you have ruled like you cannot spend someone else money what I mean by you don't own the private you can't spend the money and you have other kind of rule you cannot reply transaction and you cannot rewrite history well you said that you can't rewrite history I like I like to disagree because you can always rewrite history and blocks and blocks on is mutable only by consensus so if everyone were to agree on the time to rewrite history then you could but if it's a joke it's a joke consider the job because it's very unlikely but it's yes so now maybe you familiar with not familiar with the token classification here so can you mostly already familiar so I'm just rephrasing stuff that are very general and already because that's the basis on which I will I will go further and I want to be sure that everyone is familiar with this rule so right now you have the financial regulators across the world FC included FEMA SEC and others they have this the province is following classifications I think I got it wrong some more in the middle layer in the presentation but the margin let's a security token is the one that I live regulated you need all the regulation that applies Reiner to burn a financial industry which is qi CML qualified with thousand and many others and all investment targets there will be classified securities so that you see already a discrepancy in the blocks in vaults where you have a lot of ice shows that try to not be within the security tokens but because they are invested as well investments token they are they will be in the end the final security if it I think there was someone that say if it looks like an investment she said that is not an investment we didn't look like conventional it is anywhere in investments I'm sorry I can't said the web the guy said it but it was very funny and I'm just not funny yeah sorry guys when you have the payment token payment token the classical one our eater Bitcoin which are not used to invest or to build the project they're just there to do transactions the limits is quite not always very simple but really consider the idea that if you put money into something the guys on which you have invested the team which you have invested they all you back something that's an investment if the guys would define this token and build the system just offer it without any reciprocity then it can be a payment again I say candy because the the distinction another not only is very clear then if you want to switch back and forth with yachts there is some regulation that applies we'll need a cat like you I see like those done by exchanges right now because they are payment tokens it's been more complicated than that but that's the general ideas and then you have utility tokens which have no purpose sorry which have the non-financial purpose and that doesn't fall into the previous category the idea I used generally to explain what so teeny token is is like if you had a board game and you have a token that's not tradable like imagine a score token token that represent the score you have but you can't sell the score because in some get some very funny games you can even buy and sell between kleiers your own score so that's why I'm saying that the definition is not very clear it's a bit it's not very precise so if we look again in the exchanges I was there and italic said I don't know if you remember that's it's a definitely up central exchange could burn in hell as much as possible and Vitalik was sitting here and next thing there was a guy which was the CTO of conveyance and they were just next him and he said just like that that all exchanges it all centralized exchanges should go to - should burn in L so why that's it's because there is a lot of concerns there is a concern about a financial point of view not only but there is a concern about financial point of view where exchanges operates in a gray zone the fight the fiat money is very regulated banks you always have a banks when you have chat money you have the banks which is involved some points so if the exchanges that own banking license he has a partner which is Bank which operates for him order highly regulated paths that's why you still to do Qi CML and there's quite other things as well but this is the general idea and also you have the fact that for cryptocurrency it's pretty much L so I said advise that you consider cryptocurrencies payment token but this is not the case consider that exchanges they don't necessarily own the bit kind of selling so it's not the blockchain value the ledger on the blockchain is completely your pack you can't have it so you can't challenge that the selling bit Canada oh so sometimes they're all just creates bitcoins out of thin air they will let people thread between themselves on the platform because most many people don't leave the blockchain and all the crypto on their own private keys and as you as we say in the in the blogging space if you don't own the private key you don't earn the money so exchanges are centralized sorry centralized exchanges are big problem decentralized exchanges doesn't have this issue because the centralized exchanges they are on the ledger of the exchanges is on the blockchain so you can really challenge that blockchain values and blockchain rules apply there so now let's talk a little bit more about compliance so you have ice a dimension already at the node you customer the key ways you know you customer policy it's identifying the customer discovering is assets and qualifies profile I mean is investor profile so you can't do the same thing on someone which is quite qualified investor that someone which is just a guy in the streets a qualify investor will share responsibility in the investments very Max is supposed to be knowledgeable in what it does where the guy in the streets you have to protect him all consumer protection will apply to the guy in the streets so you really can't do the same thing a strict protocol Dave it is a complex mortgage structural mortgage you can't do it to a guy in the streets you can't sell it you have to sell it to someone that's that you are in measure to prove that these guys knew what they were buying and then you are dancing money laundering policy avoid forbidden use so you can't process money as a intermediary or a bank you can't process money that's linked to crime or terrorism you have to detect complex patterns but people use to ID or mislead informations like in our email usually we talk about a threshold that when you below you will be too costly to find grain analyze all the payments so you don't look when the amount of the transaction is very small because it will cost you much more to the system so some people try to make a lot of small payments to ID with large amounts so you have to detect part of the ML policy you have to detect those kind of patterns that try to either hide behavior and also for the large one you have to do the correct analyzes which can be very complex sometime because if it's a complex sale of shares from corporates where you might have shared the rule that applies where you can't have the majority of the share out something like that it's require a lot of auditing to be sure that you you follow the rules so the more the bigger the transfer is and the more check that will be applied to the transfer because the more risk as well as for the bank of the intermediary so you will do the extra check as well so now at Machpelah we're doing something very original we're doing what's called the bridge protocol so it's a on contract driving protocol on Acharya where you execute a chain comply those compliance rules we define at the core what's check need to be done how you can do it and we process them we define them as mat contract so it's fully transparent fully editable by anyone we have a limited centralization because on the regulated world if something bad happens for whatever reason in the world you may have a judge or the law authority that's come to the bank of the financial intermediary and ask this entity to execute or unforced decision I don't like to say too much about it but seizing money has to be designed within the protocol so the legal authority may seize your money on the blockchain so we have something that allow a specific private key we give to the legal authority to sign operation why does that or at least when it does that in our deserts so is accountable later on for the season image he has to assume the decision that he has been made because we assign with his own key this operation so that's what I mean audit ability and accountability in the bridge protocol we try to tokenize all financial assets this include as I mentioned yet but also no shells loan and other in the future because it's on the blockchain it's open infrastructure it mean everyone can look in the back office of the bank of the platform everyone can have a look of how are you executed at what cost at what price and ow with which would you've been executed in many banks if you're the big guy you executed faster or at better condition than it is a small guy particularly in exchanges if you have a lot of money to cash out from your ico don't go on the excuse called the managers of the tech changes try to find directly a deal because he will front run the customers and try to to give you the best deal because you come with a lot of money some more more volume for him which is in itself criteria of the of the interests of the exchanges is how much volume do their per day so if you can bring more volume maybe they can even pay you for the more volume you bring in you bring to them another interesting feature in the bridge protocol is that not only we open the infrastructure to be accountable but we also open it for execution of smart contracts to other banks partners so the idea is not to be the only one Oracle operating it but to operate along with other banks that will be willing to share this protocol together but we also want to open this protocol to non-bank or individuals that are interested to have developed their own smart contracts on Fiats shares load anyone any guys of you without any banking regulation would be able to do it with the bridge protocol because the tokens are compliant inside themselves so whenever you manipulate them you compliance with the token so yes the token if you go deeper in the details you see that the token has this feature the following features there is the maybe limitation on transfers based on what I meant mentioned before based on the qia and the AML rules so if you're not qia there won't be problem for small amount small transfers but if you it's a big translate and we mentioned before we need to do extra check potentially and we'll need to be able to approve your transfer or authorize some-some transfer the way work is also it's linked to a queue I see so if you're a big company owners large building or large companies and you have a lot of money you have billions you will have a limitation which is not the same as the guy in the streets well they customize for user limitation that fits your needs but will be able to do that because we have identify you the identification is not done on chain is done off chain on chain you just have a link an ID that reference you for the smart contract execution that's a limited and optional user key I see that I've just mentioned the token aswad the ability to extend an upgrade rules we know the rules today but part of the regulation Ward's you need to be able to change it on the blockchain when you want to change the rules I how do you do you try to do a self fork but if you can't you have to do at work which is something that has to be agreed by consensus by the community when you're doing an art form usually doesn't go most of the time doesn't go so well but he has to be agreed at the community so if we want to bridge both worlds it mean that a change on the regulated world should not must not need consensus of the unchain worlds because that's not the decision of the on channel it's the decision of the regulated world which has his own rules and authorities and governance rules that drive himself and the one world cannot chain the rule are the other worlds each one has his own way to work and as I mentioned accessibility which is done in a way that the guy who sees the Torah team sees is accountable and auditable so as a bonus based on that what I've just described you you get as well as its following one so you get the ability to have proof of ownership so you're going to tell me it's a blockchain everything is accessible and visible it's a blockchain but only Chaya in particular if you are so easy to developer you know that you can't access the very story of the production you can access the logs he has to be on the state's it would be highly inefficient is very expensive to try to store all transaction on the state's basically won't work because it will grow it will grow and the system has limited capability for the state's manipulation because the log that it can and the backlog can be a push away on the hard drive whereas the state has to be within the evn context so the idea that you can request to add proof of ownership on chain so it gives you a description that at that between that time and that time between the two dates you had that amount of money and because it's better the years history I see at the token level whenever you do a transfer you can check that it was modify or you add the modification of the transfer so you able when you ask for proof of ownership you will go back in time look at where was you last transfer and it will tell you that during that time you have elements you can also request automatic trans proof of ownership on transfer if you ask for it when you do a transfer which will generate exactly on the time you are balanced and you also have the ability to have claims which relate to the proof of ownership which is dividend voting rights this is more for the shells by the way you can ask for anything but it makes sense to have dividend and what to ride on shells and the bridge token is already alive it's under maintenance so yesterday we have been approved by the Swiss authority in the counter of genève in the Geneva Council we have been approved by the Swiss authority which may call tokenize shells legally valid what does it mean you mean by investor by participating or by adding the tokenize shells you will get the protection of the Swiss authority if ever we try like some ICO or some other investments we try to go out with the money if ever we try to do that then we'll be sued by the Swiss authority which is quite powerful um yes it's under Italian magnets so behind this token and this protocol you have a project of a bank a Swiss bank why do you need a Swiss banking license why would you need that you need a tunnel on the regulating wall to accept deposits so if we want to accept a customer money we have to have a bank license or depend on another banks which is adding one as I mentioned because we have we would have Bank license or the asset of customers will be protected up to eighty-five thousand GBP by the so the GBP is obviously buys if we were having a bank license in the UK it will be eighty five thousand GBP in Switzerland it one hundred thousand Swiss franc which is relates in the same kind of idea so if when it banks fails then the states the or the authorities we found a customer's up to that level which is which is very important for guys we don't have large amount of wealth they can't accept to lose any kind of amount of value because they depend on that to live every day and suddenly interesting why to do it in Switzerland it's because in Switzerland they have the very very old one few centuries old governance and that governance is already quite decentralized so there is no powerful state authority there much more power on the lower level the council first and then the city and the community below and also we want a bank because we want to provide a new paradigm a new way to do banking if we were to rely on Bank we will be will have to follow the world of the existing banks and because we want to change the prodding we need that that license what I mean by change the priority is that that's we want to be full reserved what does it mean right now if you are in if you I will do money in the banks and you ask for a loan for example they don't have the money that's going to they're going to give you for your loan they will create it out of thin air because they have authority from the central bank central bank if to bang the rights to create money out of thin air which means that some are they playing with the citizen money another way they playing with money is that the money you put on the banks you put at the banks the nut is not staying there for you waiting for you to withdraw it it's played on different markets so when something goes bad like in the supreme crisis or the crisis the worst system can fall down because there is no money your money is gone you give it to the bank if you trust the bank for that but your money is going so being 100% for reserved I mean that's Humana just step there because we are on the blockchain it's easy to be accountable for that it's easy to check for that that's your minor is there as I mentioned we build around an open marketplace and we will provide hybrid seamless unchain of chain user experience so your banking accounts will provide both the on chain experience as well the off chain experience which you can also use standard DSC 20 wallets any kind of wallets if you want to manage it on you all because you want full ownership of these assets why do you need off chain you need to have chain because on chain is very powerful it's very it's very its transparent it's provided its purity accountability but it will never be as performance in terms of speed and cost for particularly for small amounts then so the option will be much faster and much cheaper on small transaction then the blockchain can either be this this is because when you have one guy deciding for everyone it will be always more quicker faster response system governance than when you have to discuss with everyone and agree together in a consensus towards toe decision democracy is great it's powerful but sometime you need less democracy and more efficiency it's depend of the business context some impera is a new kind of Swiss bank so we'll try to regulate all kind of financial asset and put it on the blockchain through a token a token and it's token as this version and if you want to know more we have the websites and all the card that I mentioned is on the guitar and not all the code on github is on the main channel but the token that I mentioned the bridge token isn't in dimension and this bridge token represents the shares of the company mum pillow so that fits for me you seem very serious now it was not a very funny topic so you mentioned to two authorities which had a completely different view on the matter so you have the authorities and the bank the banks are some of financial Authority in itself but they completely different from the regulator's banks has different problem different perception and different understanding so you have some blanket that to understand what we do and those bankers might be scared by how we can disrupt the business because it's like putting all the inefficiency open for anyone any customers to see you have other bankers that not familiar with technology that just don't necessarily understand exactly what we do there's a guy that do private blockchain well today I heard on Twitter a centralized blockchain should some of you can explain to me so that's sure that the understanding is we should not laugh about those people because they try to understand I'm truck maybe I'm naive but I think they try to understand and that's where we need to explain them that yeah centralized blockchain or private blockchains is like black and white is not the same thing let's the questions let's so let let me ask you first question are you from the bank Awards because you look familiar we're knowledgeable and this is a very under lighted towards your question so you have to question let's say the first one is about if you go for reserved what you mean is that you have a liquidity problem and what you do one way to solve it in huge amount of capital if you have you demand a caravel yourself you have the liquidity which is fine another way to do it is using liquid techno technology that bring liquidity and interestingly blockchain provide liquidity when you get tokens so the shadowkhan is not exactly this case but all talk must the reference of 320 it's 18 decimal 18 decimal it divided the ball at the infinite so basically you get large a big big big big capital just by shifting 0 with the decimals so you simulate liquidity that way that's one way to achieve liquidity another way to achieve liquidity it's to make their assets more transferable so on the blockchain on the blank wall sorry the weight transfer walks you probably maybe you you can consume what I'm saying I'm working banks but maybe old banks are not the same you have batch of the Knights and the time it takes for an operation is counting days why because you take only one batch Knights because then you double-check what do all my friends from the 60s I've done on the Knights and are you so scared to touch them so you just check the other night the other day you check what I've done and when you have five batch to run consecutively it's mean you're going to take five days so that's an issue on traditional banking industry if you want liquid that prevent liquidity in that way there's other ways but generally speaking my point is that technology may be used to provide liquidity if you change predictions then you can offer new features and I think we can go full results because of the use of the blockchain which you it's much harder to do on the other way then you ask me another question can you just repeat it I'm sorry but there was another question oh you were stalking a security so I remember like no question so I will ensure that the the the big lies problem just after just go back to the issuance well how do we gonna raise money well maybe I should be the other way around as well yes you need in in Switzerland you need 30 Millions to other bank lies and making license it's one of the most expensive place in the world maybe but because you're also in Switzerland you offer so many government's values in terms of transparency accountability already within the law regulated world it's very it's one of the very few corrupted wall country in the walls so it's very valued - a decent Switzerland so unit for exaggerating a little bit basically you need 1/3 of that amounts in that you put you on a segregated accounts that the regulator will take for him if ever you screw on word for whatever reason you screw on something you will you will be able to see that money and take it away from you that's money you can't touch you can't use you just need ten million for that then you need you need ten million almost to all the audit process due diligence to set up to organize to to review by the regulator's it's many lawyers many hours of lawyers to finance let's sell this license and then the regulators will catch you and say ah interesting you you put twenty million now are you going to up the rates now you little little money to pay all these people so they ask you to have like five years of operational money so that's having big lies in Switzerland in other country its smallest it can be simpler but you have this same kind of patterns but much cheaper so yes we're going to need a lot of money but so I can't discuss all that matter right now because there is we try to do it legally and then legal rules applies so as I didn't do you the qia yet I don't know exactly we were you are so I can't really spoke about that what I can say that we're not doing really sto in the protocol because the rescue is is a token that the regulator sees as its security but because it says just store a token you can't apply the rules of the regulator with the tokens so basically you screw and you engrave in best case you in gray zone more probably you when you're legal in what you doing 90% of you're illegal and potentially scams potentially because mass project dark I'd say naive not very knowledgeable in terms of compliance that take people armed attack people so I can relate and we not trend familiar with legal and we only discover legal after that after we say our after we we going through something but that's too light for legal you have to be do you do decisions before if you travel on to the bank you have to hire a lawyer a content that's officially approved by regulators to process this kind of stuff so yes as CEO is not is not the right way to do it that's why we use the term tokenize security tokenize shares because what we do in the shells that registered to authority Suites authority in this case and then we tokenize we put tokens and in the shells order or in the shoulder agreements we say that a token as the same value as as shells sorry [Applause]