How Real Estate Tokenization Differs from Initial Coin Offerings
Date: 2024-08-29 Author: Henry Casey Categories: BLOCKCHAIN
In 2021, over $10.3 billion was raised globally through real estate tokenization, and by 2027, the market could reach $4.22 billion.
The Rise of Real Estate Tokenization
While real estate tokenization is a relatively new concept, there are growing examples of its use cases. For example, the oldest church in Fort Collins, Colorado, known as the Old Stone Church, will be tokenized to raise $2.5 million to purchase it. Colorado House of Prayer plans to issue tokens representing fractional ownership of the church.
Natalia Karayaneva, CEO of real estate tokenization platform Propy, said that over the past six months, Propy has created more than 240,000 home addresses for tokenization, and over 100,000 American homeowners have already registered their addresses on the Propy blockchain.
Benefits of Real Estate Tokenization
Karayaneva noted that real estate tokenization is gaining popularity due to its many benefits, including the ability to fractionally own property. This reduces the financial burden and makes investing accessible to a wider range of people.
Graham Moore, head of tokenization at the Polymesh Association, explained that this is why the Colorado House of Prayer is using tokenization to attract investors and purchase a church building.
Real Estate Tokenization vs. ICO: Key Differences
While the process of real estate tokenization may resemble an Initial Coin Offering (ICO), there is a significant difference between the two. Unlike ICOs, where investors purchase tokens that often do not provide ownership rights to any asset, real estate tokenization allows investors to acquire legal rights to ownership of a real property.
Tyler Vinson, CEO of REtokens, emphasized that “Stone Tokens” are security tokens backed by a real asset — the Old Stone Church. These tokens are compliant with the requirements of Regulation D 506C of the U.S. Securities and Exchange Commission (SEC).
As such, real estate tokenization provides investors with real ownership of the asset, which distinguishes it from ICOs, which were often not backed by real assets and did not always comply with regulatory requirements.
