Brazilian Investment Bank Tokenizes Real Estate on Blockchain
Yesterday, BTG Pactual declared the issuance of its ReitBZ token utilizing the Tezos blockchain. ReitBZ is a security token supported by Brazilian real estate.
Brazil-based BTG Pactual is Latin America’s largest independent investment bank and has total assets of $34.7 billion. Last year, the bank declared it would utilize the Tezos blockchain for security token offerings (STOs).
In February 2019, BTG Pactual revealed that it would begin tokenizing Brazilian real estate on the Ethereum blockchain. ReitBZ has been utilized to obtain 323 real estate units, of which 181 units have been sold. The bank will shortly start 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.
Usually, real estate investments are possessed for institutional and larger investors. By tokenizing real estate, smaller investors get an opportunity to purchase 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. 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 in a statement.
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 accessible 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 imprisoned in a corruption probe.
Tezos is an open-source blockchain protocol and is recognized for its on-chain governance model, proof-of-stake consensus, and the capability to verify smart contracts formally. Most lately, the Association of Chartered Certified Accountants (ACCA) declared it was investigating Tezos for accounting operations.
Meantime, Securitize has produced a real estate tokenization platform in Japan. Tokyo-based Lead Real Estate was also examining security tokens to fund condominiums and hotels ahead of the Japan Olympics 2020.
Others examining real estate tokenization involve Germany’s Bauwens, SK Securities, and Hong Kong’s Stan Group.