Tokenization of St Regis Aspen ski resort was not only one of the first successful projects in securitization of real estate. It set an example and became in many ways a reference point to blockchain in realty. We followed Aspencoin closely, and thefore it is a special pleasure to talk with Stephane De Baets, the man who did it all, the founder of Aspencoin.
Read his answers to the questions of our Chief Editor:
Q) The industry infrastructure in tokenization is being formed as we speak. Currently, to someone who wants to tokenize his/her business or property the choice of platforms is rather limited. However, what is your vision to an ideal issuance platform and an ideal trading plaltform for an owner of assets to be tokenized?
A) Technology will be commoditized very soon. What is more important, in our view, is to select a blockchain and token standard that will perform well from a security and governance point of views. We started with ERC20 but are shifting to Tezos for future issuance. As for platform, you truly need to look at distribution capabilities, who their clients are, what type of risk appetite, etc…
Q) Various news sources mentioned you brought $18M worth of security tokens to Securitize? Can you confirm this number?
A) Indeed we are migrating the entire amount of tokens.
Q) What does the transfer mean to an investor, that is to someone who wants to purchase Aspencoin?
A) Aspen coin are still restricted for now for US investors.
Q) Fractional ownership in the luxury ski resort, what exactly does it give to someone who buys Aspencoin?
A) The effective true ownership in the resort and all the economics associated with it.
Q) You are one of the pioneers in tokenization of real estate. What is your conservative estimate of this market in 1 and then in 5 years?
A) I believe that market will reach 500 billion – $1 trillion dollar in 5years . In one year you will probably have about 2-5bln of real-state token being issued. It will work in Asia before it comes back in the US.
Q) Security tokens unlock liquidity. How will you suggest to atttract buyers to this new class of assets?
A) We believe liquidity will exist because 1: we will create use of token on the Point Of Sale ( fungibility) 2: the size of the asset class (coin of coins) 3: success stories (it is up to the market players to issue quality token)
Q) Besides liquidity, you outlined two other core features of real estate digital securities, that is accessibility and transparency. Please elaborate on these two, how do they differ from tradtional real estate?
A) Typically you woud need to write a check for USD250M, if you want to buy a luxury hotel. Here you can buy with as little as USD10,000. As for transparency, you can log on to the portal and see monthly performance data. That is pretty efficient I would say.
Q) In your opinion, what is the most challenging in tokenization of real estate?
A) Getting approval from lenders, regulators, operators.
Q) If someone wants to tokenize his/her real estate, what would be the optimal way to do it now. Can you describe the process?
A) Be ready for a tough ride, surround yourself with professionals who know what they are doing. It is very early days.
Q) What is the current cost of tokenization in real estate? What are the main components of the cost? I understand it may differ from country to country and that it depends upon the type of real erstate as well, perhaps you may come up with an estimate relative to the market vaue of real eatate in question?
A) Distribution costs varies from 0-7% legal is a big portion, so it depends and who your lawyers are, then you have token standard, platform cost etc. Platform operators like Securitize will be a better place to talk costs.