Blockchain Tokenization Could Revolutionize High-Value Real Estate Market, Says KPMG Exec
Summary:
Kunal Bhasin, KPMG Canada's digital asset co-lead, highlighted the potential of blockchain tokenization in high-value real estate, stating that it could open the market to institutional investors. While the concept is being slowly adopted with some hurdles, he expressed optimism for the expansion of tokenized Treasurys and money market funds. However, he warned that concerns about fraud and scams still deter many organizations, though measures are in place to identify and address illicit activities.
When KPMG Canada's digital asset co-lead, Kunal Bhasin, spoke at the Collision Conference in Toronto, he discussed how tokenization could revolutionize the world of high-value commercial real estate. He suggested that through tokenization, properties traditionally owned by real estate moguls and pension fund managers could instead be held by institutional investors. For example, prominent landmarks such as Toronto's Eaton Center could be partially owned by family offices via blockchain tokenization.
Bhasin forecasted that real estate tokenization could be one of the most significant applications of cryptocurrency for institutional investors. However, he also highlighted that many players in "institutional decentralized finance" would prefer transactions to occur in a monitored environment.
Deriving from his experience, Bhasin highlighted the importance of stringent "know-your-client" checks alongside institutions' favor towards efficiency brought about by decentralized financial technology. Yet, they also want transparency regarding whom they're dealing with.
The concept of tokenized real estate is gradually being implemented. For instance, an investment opportunity into a Hampton by Hilton hotel at El Salvador's international airport was facilitated by Bitfinex Securities via a tokenized asset raise. However, the venture only managed to secure $342,000, which is well below its target of $6.25 million.
On the other hand, Bhasin expects the tokenization of Treasurys and money market funds to thrive in the near future. This belief stems from the success of the BlackRock USD Institutional Digital Liquidity Fund (BUDIL) that has accrued $462.7 million in value since its inception in March, as per data from 21Shares.
Yet, despite the potential benefits, asset management firms and banks exhibit caution when integrating into the cryptocurrency space due to the notorious history of fraud and scams. Bhasin acknowledged this reputational risk, but emphasised recent improvements. Particularly, KPMG employs infrastructure from Chainalysis to detect possibly illicit activities tied to its clientele.
Bhasin pointed out that every industry faces issues of fraud, but banks would show more interest in firms who've integrated best practices and systems that identify illegal activities. He predicts that companies will soon face risk by not participating in the digital asset space, since it may give their competitors the upper hand.
This report originally included content from Sam Bourgi, also attending the conference.
Published At
6/19/2024 8:51:00 AM
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