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Real Estate Tokenization: A Brief Guide – ReadWrite

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Real Estate Tokenization Platform


Real Estate Tokenization refers to the division of a property into tradable shares or digital assets on a blockchain network. Many countries and regulatory bodies are making legislative changes to create a friendly business environment for the tokenization of real estate assets.

Some of the Pros of Tokenizing Real Estate

  • The property developers gain access to additional amounts of capital as they can fractionalize a property efficiently. This facilitates more participation from investors leading to greater capital inflow in a project by reducing the barriers.
  • The price of the asset will be quite close to its real market value as the illiquidity discounts will be significantly decreased. A lot of assets can be easily traded at low fees by potential investors in the secondary market.
  • Real-time pricing information can be obtained from the order books. Cumbersome paper-based systems that share data asymmetrically, need not be relied upon anymore. This ensures that better trading deals are discovered by investors on a timely basis.
  • Investors can experience a higher level of transparency as the blockchain-based system will be updated regularly to know their rights and restrictions related to the use of the tokenized digital asset. They will know the value of the underlying property beforehand.
  • Various overhead expenses will be reduced and settlement of funds will be done faster. The entire governance of the platform is taken digital and happens automatically. Real Estate Tokenization removes the role of intermediaries like brokers and agents.
  • Wealthy investors can effectively diversify their portfolios by investing in multiple properties around the globe and enjoy the benefits of higher returns.
  • The chances of fraud are decreased as a transaction that is recorded on the blockchain network cannot be changed by anyone. This establishes more trust and confidence in the minds of property investors.
  • Real estate tokens are financially supported by real-world assets. They are less risky when compared to volatile cryptocurrencies or some dubious ICO’s.
  • Prompt checks and balances are ensured to maintain stability so that the value of the security token does not fall below the net asset value (NAV) of the real estate asset.

How to Tokenize Real Estate Assets Through a Well-Defined Procedure?

  • Deal structuring is the initial phase where different factors like the type of asset, the kinds of shareholders, and the relevant regulations will play a big role. Property developers will ensure that adequate liquidity is available for the current set of investors before raising money for launching new development projects. The owners of assets must decide the type of property that they wish to digitize, form either a Special Purpose Vehicle (SPV), or become a part of a Real Estate Fund or a Real Estate Investment Trust (REIT).
  • The shareholders will have to be given various rights like dividends, a share in the equity, and taking part in the governance of the property. The execution will depend on the property’s location, the total fundraising expected, the taxation for the tokens, solicitation restrictions, and the type of investors.
  • The second phase involves the selection of the right real estate tokenization platform for Tokenizing your Real Estate properties. A suitable blockchain network must be chosen for creating the token, a secure custody solution is needed to store the tokens safely, KYC/AML verification of the investors is required, and the digital securities can be offered to the prospective investors either via primary issuance or the leading secondary exchanges. Tokens are mostly launched on well-known blockchain networks like Ethereum, Hyperledger, Tezos, or Stellar that offer a reliable tokenization platform.
  • The third and final phase revolves around token creation and distribution. Different kinds of payment methods like fiat currencies, cryptocurrencies, and stablecoins must be accepted from the investors for buying the digital tokens. The total supply of the tokens must be finalized and additional tokens can be minted based on the operational requirements and the sentiment from the investors.
    A digital wallet available on both web and mobile is needed for the investors to store their tokens. The tokens can be sold to the investors by conducting a live sale. You can view the cap table that contains details of the hard cap and the soft cap to see how you are progressing in your fundraising campaign.
  • The other factors to take into account are the formulation of a corporate code, mortgage issues, tracking all the activities of the token holders regularly, and dealing with legal issues.

Why Digitization of Real Estate Assets Represents the Future?

  • It brings many improvements to the conventional real estate industry by rendering more liquidity opportunities, ensuring better market transparency, reliable tracking of ownership, and enabling real-time investing processes.
  • It needs more cooperation from blockchain developers, tax experts, accountants, lawyers, and real estate professionals to ensure the successful launch of a token without risk.
  • Regulatory uncertainty is a big challenge that affects the mindset of investors who wish to trade.
  • Though a tokenized Commercial real estate asset (blockchainappfactory dotcom — see below) promises a higher level of liquidity, token holders need to be updated on the assets they hold and the different risks that affect their value.
  • Since tokens can be exchanged on a real-time basis, it leads to better opportunities for ambitious and innovative Real estate developments.
  • Real estate tokenization can compete with other popular fundraising substitutes like private equity and venture capital.
  • The USA, Europe, and some parts of Asia have dealt well with the economic and technological aspects of Tokenizing Real Estate.
  • In the next 5 years, Tokenization is expected to yield a whopping $4.2 billion for the global real estate industry.

As seen above, we have experienced how to digitize Real estate. The market conditions are rapidly changing as access is no longer limited only to the elite groups of investors.

Developers can raise capital with more freedom and flexibility, investors can move their funds efficiently, and property owners can manage their equity more effectively. Real estate tokenization backed by blockchain technology will become the order of the future.

Blockchain technology plays a prominent role in the digitization of real-world assets. Tokenization platform offers a vast liquidity solution with its significant features.

Real estate is a phenomenal sector where the investors get their traction of passive income.

Blockchain App factory, a blockchain development company offers hassle-free tokenization solutions for your real estate properties and other physical assets with its reliable tokenization platform.

Vanessa Jane

Vanessa Jane is a Technical Writer in the Blockchain App Factory, serves as trusted advisor for the upcoming blockchain Avenues with her enthusiasm for blockchain and Research-focused mindset. Vanessa Jane’s market analysis and forecast reports acts as a knowledge base for phenomenal blockchain business development.

Politics

Fintech Kennek raises $12.5M seed round to digitize lending

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Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Fortune 500’s race for generative AI breakthroughs

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Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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Politics

UK seizes web3 opportunity simplifying crypto regulations

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Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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