In an industry first, BPN Capital Group, a decentralized finance agency focused on developing real-world use cases for blockchain technology, has announced a blockchain-based commercial mortgage.
The group said that the tokenization of the property – a premier residential condominium and hotel tower located in SLS Lux Brickell in Miami, Fla. – will “allow accredited investors to directly hold and control their stake, eliminating the restrictions associated with investing in commercial mortgages through conventional channels.”
The tokenization of assets is the process of issuing a blockchain token that digitally represents a real tradable asset. This tokenization is a security token traded on an exchange which means investors can part with a small portion of their stake while retaining some of their investment.
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“This is like the moon landing for blockchain,” said Edward Rodriguez, CEO of BPN Capital Group. “We are tokenizing a first-in-class fully stabilized property with sophisticated tenants like Chipotle, Ojo de Agua, Kaori, and Bellillo. We are restoring control to accredited investors and family offices over their assets. This also circumvents the hoops they’d have to jump through to invest in commercial mortgages like this on the secondary market.”
The tokens associated with the property are available to investors who qualify under the US Securities and Exchange Commission’s Regulation 506(c). After the mandatory one-year holding period, investors will be able to sell or trade their tokens just like any other registered security.
By tokenizing the property, investors will not be locked into long-term ownership, unlike conventional bonds, which take years to mature. Instead, they can trade their tokens on the SEC and FINRA-regulated Alternative Trading Systems, tZERO.
“Historically, if you wanted to sell 5% of your holdings, you’d have to call a broker or an accountant or someone like me who would then do a quantitative risk analysis before putting your assets back on the market,” Rodriguez said. “Tokenization puts investors in the drivers’ seat and lets them sell their holdings directly and easily, as they see fit.”