A German start-up has obtained approval from the German financial regulator, BaFIN, to begin offering tokenized real estate. The agreement, worth €250 million ($280 million), allows Fundament to issue the first tokenized real estate backed bond on Ethereum that can be offered to main street investors.
This is not the first time that property has been tokenized—Propy has been doing so for a while. But where Propy is focused on individual home ownership, Fundament wants to lower the barrier of entry for anyone to buy slices of property, and buy and sell them like they would tokens on Ethereum.
Owners of these tokens are entitled to similar rights to traditional property investors, including an annual dividend of around four to eight percent, according to Florian Glatz, co-founder of Fundament.
Experience Web 3.0.
Be the first to get Decrypt Members. A new type of account built on blockchain.Early access
But, there are additional benefits that traditional investors don’t get access to. Investors are able to liquidate their investment at any time, without having to fill out a stack of paperwork. Since the tokens can be easily traded, the hope is it brings more liquidity to the real estate market.
Buyers of these tokens will be funding five separate construction projects, three in Hamburg, one in Frankfurt, and one in Jena, a small city in central Germany. There will be compliance checks like know-your-customer (KYC) and anti-money-laundering (AML) regulations to ensure things stay in line with BaFIN’s regulations.
The tokens can be bought with bitcoin, ether, US Dollars or Euros. And best of all, there’s not an ICO in sight.