Brazil-based BTG Pactual is Latin America’s largest independent investment bank and has total assets of $34.7 billion. Last year, the bank announced it would use the Tezos blockchain for security token offerings (STOs).
In February 2019 BTG Pactual revealed that it would start tokenizing Brazilian real estate on the Ethereum blockchain. ReitBZ has been used to acquire 323 real estate units, of which 181 units have been sold so far. The bank will soon launch a secondary market to trade ReitBZ.
ReitBZ enables individuals to invest in Brazil’s real estate market and receive periodic dividends based on the performance of underlying assets. Brazil’s real estate market is struggling since the recession hit the country in 2014, and the current COVID-19 crisis has put a pause on recovery.
Generally, real estate investments are reserved for institutional and larger investors. By tokenizing real estate, smaller investors get a chance to buy part of a property with ease.
“We decided to issue ReitBZ in partnership with the Tezos Foundation to test the Tezos blockchain so that we can use the technology to execute more complex future STOs. We are confident that the Tezos solution is technically robust, and this issuance enables us to guarantee more resources to invest in ReitBZ moving forward,” said Andre Portilho, BTG’s Partner responsible for the STO initiative.
BTG Pactual had reached the soft cap of $3 million for the ReitBZ STO and has set a hard cap of $15 million. Ironically, ReitBZ is not available in Brazil and the U.S., due to regulatory uncertainties. Back in 2015, BTG Pactual was at the center of a controversy when its founder and majority owner Andre Esteves was arrested in a corruption probe.
Tezos is an open-source blockchain protocol and is known for its on-chain governance model, proof-of-stake consensus, and the ability to formally verify smart contracts. Most recently, the Association of Chartered Certified Accountants (ACCA) announced it was exploring Tezos for accounting operations.
Meanwhile, Securitize has developed a real estate tokenization platform in Japan. Tokyo-based Lead Real Estate was also exploring security tokens to fund condominiums and hotels ahead of the Japan Olympics 2020.