A Discussion on Blockchain, Real Estate, and Regulation

Highlights from a panel at AREAA’s New York Meetup featuring industry leaders from Citizens Bank, Herrick Consulting, imbrex, and RealBlocks.

The Asian Real Estate Association of America hosted a panel on blockchain at its Manhattan, New York meetup this week. Featuring leaders and innovators from The Serchant Team, Citizens Bank, First Nationwide Title Agency, Herrick Consulting, imbrex, and RealBlocks, the discussion ranged from the current state of regulation of digital assets by the SEC and other governmental agencies, the roadmap for widespread adoption of blockchain in real estate, and which particular solutions will affect the market first. You can watch highlights of the discussion, and read the report below:

Ryan Serchant, founder of The Serchant Team and star of Bravo’s hit TV series Million Dollar Listing, kicked off the panel answering a question from moderator Manish Shah: “Has your business been directly impacted by the blockchain or cryptocurrencies”. Serchant said that no one has tried to purchase a property using Bitcoin, yet. Serchant further explained he believes that price volatility is one of the main limiting factors for its utility in real estate transactions. “We know a developer that began accepting Bitcoin for condo transactions. It only complicated an already complicated process”.

Perrin Quarshie introduced Real Blocks to begin, stating that the project is the “first platform that creates a truly global Real Estate market, making it possible for people raise or invest capital anywhere in the world.” The company uses what they call a DAG hashgraph and utility tokens to transact quickly, and is launching soon with partnerships with New York brokerages. Perrin noted his inspiration was driven from the inefficiencies created by centralized real estate brokerages. The RealBlocks platform has plans for a token launch, but no set date as of yet. We look forward to learning more!

“The regulations that are currently being applied to blockchain technology go back further than the punchcard,” remarked Richard Morris of regulatorily-focused New York-based consultancy Herrick. He noted that the Securities and Exchange Commission were currently in a tussle with the Commodities Futures Trading Commission for jurisdiction over the burgeoning digital asset space, and that current SEC standards could well change in the near future. With more news about SEC investigations into cryptocurrency emerging, his point was clearly made.

Morris went on to lay out the intricacies between tokens that are securities and currencies. He noted that if there is any possibility of an asset accruing in value in a way that relates to the performance of the company, then it is likely a security and may possibly be regulated by the CFTC. Otherwise, if it is a currency, then it falls under the jurisdiction of banking regulators. Even then, if the currency is seen as a store of value, it may fall under the jurisdiction of the CFPB, which may or may not even exist next year. It’s tough to wrap head around it, but Morris and Herrick do their work figuring out the nitty gritty details of regulation.

Stephen King, founder and CEO of imbrex introduced imbrex’s global marketplace for real estate data, and the philosophy of the data-driven approach that propels the imbrex Platform. “The worlds real estate networks are fragmented into many different silos that do not communicate with each other. Imbrex’s mission is to connect these systems by enabling users to own, maintain, and control their information. The value that comes out of this is wider access, lower cost, and a new type of marketplace for data.”

Representing the project on the panel with significant product development under its belt, Stephen laid out the importance of architecting a project by first acquiring a deep understanding of the technology then seeking guidance from accountants, lawyers, and regulators.

Executive Vice President of Citizens Bank, Ace Watanasuparp, an early adopter of blockchain and Bitcoin said “Blockchain could have avoided the 2008 financial crisis,” he stated, noting that financial transparency would have shed light on the suspect mortgages that triggered the housing crisis. Watansuparp noted that Santander, Bank of America, and US Bank were already using blockchain solutions, and that this trend is likely to continue. Coming from a banking background, Watansuparp then laid out his appreciation for Ripple. He made a personal prediction for price in 2018, which brought some laughs to the room.

Dorian Lam, Vice President at First Nationwide Title Agency, was optimistic on blockchain’s impact on real estate, but stated he thought we were “twenty years away from blockchain decimating title insurance,” and that putting land registry systems would take a long time to make it on the blockchain. However, he suggested that blockchain could soon provide efficiency and ancillary utility to processes in the real estate industry, but perhaps without being fully relied on as the sole vehicle for the transaction process.

Manish Shah, Principal at Two Kings Real Estate Investors in New York, disagreed with Lam’s timeline for blockchain adoption. “Do you remember when people used maps?“ he asked. “Google mapped the world in less than a year and a half.” With tech like AI and microfiche, he says, data will very quickly mapped onto the blockchain. He then pointed out that, although we’re at the early stages of development in blockchain tech, progression is moving at a faster pace than even the internet and tech revolution did.

Manish then asked Stephen of imbrex what he saw as the biggest potential impact of blockchain on real estate. “Communication and standardization,” he said. “The path from this archaic paper system to working on the blockchain requires bridging the gap between the physical and the digital realms.” By using digital property identification systems, explained King, we can create a universal registry of property information that is the basis for communication for all kinds of real estate data and transactions around the world.”

The panel then opened up for questions, which you can watch on the livestream of the conversation at the AREAA New York Meetup here:

https://www.youtube.com/watch?v=42LsH_XJlTI

www.areaa.org/nymanhattan/event/blockchain-real-estate/

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