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A boisterous interactive panel addressed the difficulties and prospects of real estate on chain.
An extraordinarily boisterous (and informative) virtual panel at yesterday’s Security Token Summit shows the fractious complexities of taking managed assets on-chain — as well as the success and advancement of the tokenized real estate use case beyond those obstacles.
Michael Flight of the Liberty Fund, Jude Regev of Jointer.io, and Mohsin Masud of AKRU talked for 30 minutes on the state of securitized real estate in a free-flowing and often controversial debate that illuminated the complexities that occur when decentralised finance encounters stringent regulatory supervision. Kiran Arif of AKRU, the show’s host, seldom spoke.
When asked why tokenized real estate is so thrilling, Flight cited the market’s scale and the fact that only a small number of buyers will have access to it.
“You’ve got 280 trillion dollars of real estate assets, and tokenized real estate is gonna let all investors into that asset class,” he said.
Mohsin concurred, noting that high prices and regulations have traditionally kept average investors out of the real estate market, aside from purchases like homes.
“We want to offer these securities, these asset-backed securities, to people who traditionally haven’t had access.”
Although the use case’s potential is substantial and has been debated for nearly a decade, there has been no significant momentum apart from a handful of studies.
According to Regev, one of the reasons is the friction involved with integrating a managed commodity into a decentralised environment.
“It can’t work,” he said.
He likened existing digital real estate to “digital paper,” arguing that all of the regulatory standards and hurdles associated with real estate remain functionally similar regardless of whether it is in digital or physical media, and as a result, unaccredited investors continue to be refused entry.
Similarly, he denied that such tokens would ever be listed on exchanges or gain significant liquidity, making the use case redundant.
“You remember the days of timesharing, it sounds so good? And when you’re into it, you can’t get out? That’s pretty much what it is,” he said, comparing tokenization to a “magic word” with little substance.
Something is better than nothing
Many of these arguments were dismissed by Mohsin, who pointed out that REITs and other real estate-backed securities have achieved considerable liquidity. Furthermore, he claimed that there are 12.5 million certified investor households in the United States that may benefit from tokenized real estate (more recent evidence indicates 13.6 million), even though tokenized real estate would not entirely “democratise” the market.
Flight also discussed the substantial advancement in utility that tokenized real estate can offer. He mentioned that Liberty is collaborating with centralised cryptocurrency lender Blockfi to enable real estate-backed security tokens to be used as collateral and also gain interest as a yield-bearing commodity.
Although he remained cautious despite these arguments, Regev also made an impassioned appeal for sites and issuers to take responsibility for consumers if the use case is to achieve substantial momentum.
“We need to protect the simple person who is busy, busy to survive, and wants their money to work for them.”