Korean financial services company and stockbroker SK Securities announced a partnership with blockchain startup Kasa Korea which is developing a platform for tokenizing real estate. They plan to collaborate on the ‘Digital Real Estate Beneficiary Distribution Platform’ service.
Kasa Korea has been working on building a blockchain platform to issue digital asset-backed securities (DABS) with real estate as the collateral. It was recently given a special exemption by South Korea’s Financial Services Commission to sell real estate certificates to investors through its blockchain platform, albeit on a trial basis. Earlier in May, the Financial Services Commission designated Kasa Korea as an innovative financial service business, South Korea’s Yonhap News reported.
Traditionally, investing in real estate was possible only for those who could afford to invest significant sums. To address this issue, real estate investment trusts (REITs) were created to allow ordinary investors a chance to invest in real estate.
With blockchain, the process of issuing, trading and redeeming real estate securities would be streamlined and secure. It will also provide transparency, in the sense that the valuation of securities will be in line with property rates (in theory). By doing away with paper-based transactions, investors can save time and shares in a local property can potentially be bought by global investors.
In the case of Kasa, it issues digital certificates and keeps custody of the physical property papers. Its blockchain network claims to safeguard the authenticity of these certificates. This also provides better liquidity for real estate securities, and investors can even trade in small amounts.
SK Securities plans to collaborate with Kasa Korea by providing its customers with a linked account opening service. “We will provide valuable investment alternatives through collaboration with Casa Korea, which is noted for its innovative services,” said an official of SK Securities.
For Kasa, that means that SK Securities can process Know Your Client compliance. Additionally, SK is an avenue to access a large pool of investors who are existing SK Securities clients.
SK Securities was previously part of SK Group, but last year private equity fund J&W Partners became the largest stockholder.
One of the highest-profile blockchain startups in the real estate space is Propy, which has run several projects to record property-related transactions on a blockchain. It works like a blockchain registry for real estate, and anyone can buy property over the platform’ marketplace. It aims to tokenize real estate but says on its website “one of the most difficult things to accomplish will be the tokenization of legal rights, due to property law.”
Most blockchain projects focus on property registration or trading. In Hong Kong, New World Development Company signed up the local arm of the Bank of China for a blockchain real estate marketplace.
In the UK the land registry ran a registration trial, and RBS and Barclays participated in a test that used blockchain to complete property purchases. The Mexican land registry is also exploring blockchain, and the Dubai Land Department now registers mortgage claims against real estate.