A Phil Hall Op-Ed: The other day, I had a conversation with Bart de Brujin, the co-founder of EstateX, a new real estate platform tokenization platform. EstateX promotes itself as a “revolution in the real estate industry” – while I can’t vouch for a revolution in the making, it appears this platform and other like it is on the cutting edge of real estate investing.
“Assets are tokenized on the Ethereum blockchain,” de Brujin said about how his platform worked. “The divided ownership is stored into a smart contract via regulated registrar that we work with. The shares of that vehicle are then turned into tokens and then distributed and sold to potential investors.”
EstateX enables investors to invest as little as $100 into fractional property shares, which opens them to a world of investment opportunities – and it provides property owners with a global audience to attract.
“If you’re a property owner in, let’s say, Japan, you are able to tokenize it and offer it to US investors or European investors,” de Brujin continued. “And this can be done with any type of asset. This can be done with land. This can be done with existing commercial buildings or with residential real estate. In principle, it can all be done.”
Lately, it seems like a week cannot go by without some news from the US or overseas regarding cryptocurrency and blockchain in real estate. Yesterday, an entity in the British Virgin Islands called RentFi, which promotes itself as the “first Real Estate Investment Trust on blockchain,” announced it will launch its $RENT token on Feb. 5 that will enable “global investors access to rental income,” with the promising of helping “individuals benefit from rental yields without the traditional complexities of property ownership.”
Elsewhere in the world, Klickl, a UAE-based Web3 financial platform, today announced a collaboration with IMKAN Properties, a UAE real estate developer, to facilitate property purchases through cryptocurrency. And last week, the Tokyo-headquartered real estate firm Open House Group Co. Ltd. is now accepting cryptocurrency payments from global customers looking to purchase Japanese real estate.
And it’s not just the property owners and sellers taking advantage of this new way of doing business. Last month, the Celebration, Florida-headquartered La Rosa Holdings Corp. announced it will offer Bitcoin and other cryptocurrencies as a payment option for its network of agents. CEO Joe La Rosa stated that “cryptocurrency payments offer faster, more secure transactions with lower fees while providing the potential for income growth through the value appreciation of digital assets.”
While the real estate industry moves ahead with cryptocurrency and blockchain solutions, the US federal government needs to play catch-up – and fast. We wasted four years with a Biden administration that feared and loathed cryptocurrency and made no effort to create a feasible regulatory framework to accommodate this growing sector. Gary Gensler, in his tenure as Biden’s commissioner of the US Securities and Exchange Commission, was never comfortable with this sector and did everything possible to marginalize it.
Now, of course, we have a self-proclaimed “crypto president” who even has his own meme coin – what a difference three weeks makes! President Trump signed an executive order creating a working group to develop a federal regulatory framework for digital assets, and hopefully they will complete their assignment ASAP.
It is great for the cryptocurrency and blockchain worlds to have allies in the White House. Cryptocurrency and blockchain represent the new frontier in real estate sales and investing – something that Gensler compared to the “Wild West.” Well, the Wild West was tamed and reimagined into an orderly and successful environment, and this corner of the digital world is awaiting the same approach to law and order.
EstateX’s de Brujin predicted that “tokenization is going to kick off this year” as more companies enter the space and more major players become involved. I share de Brujin’s forecast, and I am eager to see its impact on the real estate industry. The Trump team needs to get started on making this exciting new opportunity a safely regulated environment that will encourage innovation and growth for the years ahead.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
I see opportunities for small investors around the world to move even faster into the U.S. real estate market, and I see that this will likely make U.S. real estate much more expensive for U.S. residents and U.S. citizens.
I’m not at all comfortable with that outcome. It has been bad enough that mega investor groups bought a staggering 28% of all homes in the U.S. over the past few years, which drove home prices up a lot!
Now even more investors can dive in from all over the world?
Sure, one can argue that residents in the U.S. can use crypto to buy small pieces of property, rather like a stock does for personal property, but, I also know that crypto is used extensively for money laundering, and real estate is still the #1 place to clean money. And now we have crypto and real estate together?
I do not envy the younger generations. Time will tell if the crypto excitement pans out and reveals who wins and who loses.
We’ve seen crypto currency valuations be all over the place, with manipulations to pump and dump.
And we have seen in the regular real estate system these big investor groups buying up lots of homes and pushing prices up, and then a fall in prices when they suddenly stopped buying.
Felt like market manipulations to me. I’d love to see if the upper management teams of those big investor groups shorted their stocks just before they pulled out loans on the inflated valuations of their stocks, which is a common way for the very rich to get richer.
I can’t say for sure, but I’d like to know if that happened.
There seems to be a giddy rush to embrace crypto, but I see even more pitfalls ahead for Americans trying to afford a home, a business, a farm, etc. (and it’s bad now anyway).
It remains to be seen if crypto helps to give buyers more access and affordability or if crypto only expands the problems that U.S. residents already have in the affordability of real estate.
Since a real estate title to property has to be owned in the real world, there is a disconnect between these tokenized “ownership” schemes and real title to real estate. Until real estate block chains are tied to realworld real estate ownership, these tokens will be an opportunity to commit fraud against the buyers.
In the mix are legal entities with actual real estate ownership and controlled by company ownership which cannot currently be tokenized. The token owners have to “trust” the real property owners not to sell the property out without notice to the token holders.