Crypto services firm AlphaPoint unveiled a new framework Monday aimed at supporting the launch of blockchain tokens backed by regulated assets.
Tokenized registered securities continue to be a hot topic as doubts swirl around the retail variety, and there have been a number of efforts seeking to put real estate on the blockchain. To that end, AlphaPoint has launched its Regulated Asset Backed Token (RABT) framework at CoinDesk's Consensus 2018 conference in New York City.
According to the company, it has developed software that allows a token to be freely traded while also ensuring compliance with securities laws (such as, for example, selling a security token solely to accredited investors who live in the United States). The idea is to use blockchain as a conduit for introducing more liquidity into the real estate market.
A longstanding real estate and private equity firm, Muirfield Investment Partners, has joined with AlphaPoint in an effort to offer its investors a more easily tradeable way to participate in the property market.
"As a technology company and infrastructure providers, we can blend both public blockchains and the tokenization of securities and assets of any type," Igor Telyatnikov, AlphaPoint's chief operating officer, told CoinDesk, adding:
"There are huge penalties of the illiquidity discount, real estate being one of them."
Thomas J. Zaccagnino, Muirfield's founder, explained that due to their illiquidity, real estate funds tend to be highly structured in ways that might not be ideal.
While it is generally a profitable asset class over time, it can be too rigid, he contended – often, the funds have defined "lifespans" within which they operate.
That's fine in normal times, but if your fund hits its deadline to exit – and it just happens to be 2008, or shortly after the US real estate market collapsed – that might not be the right time to sell for your investors.
He hopes that tokenizing real estate will allow for a "far more innovative and profitable investment vehicle."
AlphaPoint's plan is to see everything go on the blockchain. The actual asset won't be on paper and tokenized, but that documentation will be stored using the tech. Further, it can use software to pay out dividends, if those are part of the deal, and to ensure that assets aren't transferred to people they shouldn't be.
"We can use trusted execution environments and oracles to govern what addresses these assets can be moved to and from and be able to apply the rules and smart logic onto a public blockchain or private blockchain," Telyatnikov said.
Additional reporting by Pete Rizzo.
Photo of office buildings via Shutterstock.