December 10th 2019
Originally released in 2018, BRIDGE (Banking Rules Infrastructure for Decentralized Global Ecosystem) is an open source software to create and manage tokenized securities (tokens representing ownership of underlying assets) on public blockchains. With advanced compliance management features, BRIDGE enables today the issuance, distribution and trading of these digital assets within the existing regulatory frameworks.
Built according to the CMTA’s blueprint (the Swiss association creating standards for tokenized securities), the first version of BRIDGE was used to successfully conduct the first large scale public offering of a tokenized equity in 2018: the MPS token, providing full ownership of shares in Mt Pelerin Group SA.
Today, Mt Pelerin releases version 2.0 of BRIDGE, a major update bringing multi-token compliance and advanced management capabilities for the issuance, trade and post-trade of security tokens.
Compliance is about controlling and restricting how a financial security can be transferred. It is dictated by its owner’s profile, which is established according to anti-money laundering laws and other financial directives such as MiFID II.
Like most other tokenization solutions, BRIDGE v1.0 was focused on enforcing compliance on a per-token (whitelist) basis. This works when dealing with a single security in a closed system but is unsuitable when encompassing a large number of assets, rules and transactions in an open trading environment.
With its cross-token compliance capabilities, BRIDGE v2.0 brings an advanced set of tools for security issuers and exchange platforms to enforce an institutional-grade, consolidated compliance over multiple tokenized fiat currencies and securities.
One of the core component of BRIDGE v2.0 is its rules engine, overseeing all transactions of digital assets. With it, issuers can define and attach to its tokens rules that dictate how the tokens must behave. Multiple rules can be created to reflect differences across jurisdictions. They are independently editable and can therefore evolve in synchronization with the laws.
BRIDGE’s rules engine dynamically checks and processes compliant transactions “straight-through” and puts non-compliant ones on hold for manual review by the issuer’s compliance body, maximizing this way trading fluidity.
The other major feature added to BRIDGE is the possibility to delegate compliance management to authorized third-party KYC operators.
In this way, an issuer of digital securities can select one or multiple KYC entities per country, and allow them to process the identification and compliance management of its investors.
This system also enables to change KYC operators without having to modify tokens and their attached rules.
As an interface for BRIDGE, Mt Pelerin plans to release a non-custodial wallet app that will enable users to interact with their tokens (for example to exercise voting and dividend rights), trade them through a built-in peer-to-peer swap feature and manage their compliance, all through a simple user interface.
With cross-asset capabilities, multi-jurisdictional flexibility, decentralized compliance processing and open source availability, BRIDGE v2.0 is a turnkey solution that any fintech or financial institution can leverage to start working with digital assets.