BlockInvest Set to Tokenize Non-Performing Loans in a Two-Stage Initiative
Summary:
BlockInvest, an Italian startup, plans to tokenize non-performing loans (NPLs) in two stages: a proof-of-concept and tokenizing defaulted Italian mortgages. The initiative aims to reduce the impact of non-performing exposures on its financial stability. The company will work with Milan-based firms 130 Servicing and Morgan & Davis to issue securities and tokenize distressed real estate credits. The process expects to result in better liquidity and a more manageable market.
BlockInvest, an Italian startup, has plans to tokenize bad debts or non-performing loans (NPLs) through two separate initiatives. The first project will establish a proof-of-concept, while the second will focus on defaulting Italian mortgage loans. The Italian NPL market value is estimated in the tens of billions of euros, hitting a high of 360 billion euros in December 2015, which equated to $391 billion at that time, but has since diminished.
In moving towards its main objective, BlockInvest is set to collaborate with 130 Servicing, a securitization consulting firm based in Milan, to conduct a proof-of-concept. This will involve issuing securities notes based on native digital assets directly on the blockchain. After this stage, BlockInvest will work alongside Morgan & Davis, a credit management firm also located in Milan. They will tokenize troubled real estate credits acquired by Morgan & Davis to enable tokenization of finance agreements and related instruments.
BlockInvest explained that tokenization would result in fractional ownership, better liquidity, and a more manageable and accessible market. BlockInvest, supported by Credit Agricole Italia bank and utilizing Polygon technology, aims to bring these assets on-chain to lessen the effect of non-performing exposures on the institution's financial stability and improve the health of the loan portfolio.
The status of the Italian NPL market has been a longstanding worry. In a report released on January 18, the Financial Stability Board (FSB) suggested that legislation passed in 2016 has decreased the quantity of NPLs but has predominantly left complex "unlikely to pay" loans unresolved.
The FSB urged the Italian government to continue to support the market, improve the court system to enable NPL resolution, and allocate more personnel resources to address the issue. Italy boasts one of the most advanced crypto regulatory frameworks in Europe.
Published At
1/19/2024 4:00:00 PM
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