Israel’s land registry explores real estate tokenization

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The Israel Land Authority (RAMI) has hinted at the development of a digital land registry for trading tokenized real estate, targeting individual properties instead of an entire portfolio.

The government agency disclosed an invitation to tender calling for blockchain consultants in Israel. According to the tender, the experts will support RAMI’s efforts at floating the digital land registry, with the timeline for an official launch kept under wraps.

The proposed registry will leverage smart contracts for real estate agreements and will also involve the establishment of an exchange to facilitate the trading of tokens and receipt of royalties. Under the functionality of tokenization, RAMI says the registry will support fractionalization, allowing investors to own a small piece of a large asset.

Experts have pointed out that fractionalization offers several perks, including improving the liquidity of an asset class while allowing greater participation in the markets.

RAMI’s reliance on blockchain for the digital land registry has been described by enthusiasts as a move to promote real-time and transparent transactions.

“By tokenizing these assets and using blockchain rails, real estate transactions can be nearly instantaneous and can occur directly between two parties anywhere in the world,” said Roi Karo, Head of Risk and Strategy at Fireblocks.

Karo added that the local real estate industry will reap the benefits of cheaper transaction fees given the elimination of third parties and their fees.

“Furthermore, transactions on the blockchain are peer-to-peer meaning there is no need for a broker or broker fee, which makes real estate investment more appealing, especially for small-scale investors,” said Karo. “Collectively these factors contribute to improving the overall liquidity of the real estate market, fostering a more efficient, stable, and attractive investment landscape.”

Although transactions are peer-to-peer, analysts posit that RAMI may roll out additional measures to vet the listing of tokenized real estate to protect investors from bad actors. The agency may leverage the use of a trusted third party to serve as a bridge between the digital and real world, playing the role of the middleman.

Tokenization gaining popularity

In recent months, the tokenization of assets using blockchain has garnered significant attention from stakeholders and regulatory agencies. City administrators in Busan unveiled plans for a digital asset exchange that will include the tokenization of intellectual property rights from film and gaming.

Hong Kong is basking on the highs of its recently concluded bond tokenization project, hinting at the release of a rulebook to guide the tokenization of investment products in the region. The Bank of England is bracing itself for the widespread use of tokenization of financial instruments, with the European Union (EU) taking proactive steps to regulate the nascent sector.

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