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Tuesday, April 20, 2021

Vesta Equity and Algorand breathe new life into real estate tokenization

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Global equity marketplace Vesta Equity has chosen the Algorand blockchain to launch its new real estate tokenization services, in hopes of disrupting a decades-old industry and offering homeowners the ability to convert their equity into assets. digital.

As part of this new partnership, Vesta will use Algorand to further disintermediate the many parties involved in the traditional realm of home equity and mortgage equity. With Vesta removing costly intermediaries from the process, Algorand’s technology will allow all data to be readily available and automatically verified.

The new market will allow homeowners to convert their home equity into digital assets and sell a percentage of it to accredited investors without compound interest or requiring an outright sale.

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Michael Carpentier, Co-Founder and CEO of Vesta Equity, said:

“We have become an indebted society, but this journey must change to create a more prosperous future for all. At Vesta, we believe that applying the right technologies has the answer. “

Algorand Chief Executive Officer W. Sean Ford said that Algorand and Vesta Equity share a common vision when it comes to blockchain technology and its role in creating more opportunities for real estate investors. He explained:

“By expanding opportunities for owners as well as investors, Vesta Equity is at the forefront of creating new, more accessible market opportunities by bringing participants together through Algorand technology.”

Real estate tokenization is considered one of the most compelling use cases for blockchain, but so far the technology has remained underused in the industry. A lack of institutional appetite and issues with security token lists have hampered growth in this once promising space. Overstock’s tZero security token platform was supposed to solve the latter problem, but CEO Patrick Byrne’s spectacular exit in 2019 left the project without much momentum.

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On the surface, however, blockchain technology holds great promise for asset owners and investors. By tokenizing real estate, fund owners can raise capital much more efficiently. Investors, on the other hand, benefit from easy access to private real estate.

Perhaps one of the most difficult features of real estate tokenization is the regulatory implications. By breaking down an asset into smaller and cheaper parts, fund issuers could enter the realm of securitization with their new offering. If so, it puts them under the watchful eye of the Securities and Exchange Commission.

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Regarding securitization, Carpentier explained that “the programmability of the token creates an important distinction from more traditional securities in that business rules can be applied as logic that automates the processes involved in the transaction.”

He also explained that Vesta owners’ offers “would likely fall under SEC Regulation D”, which provides for exemptions that would otherwise be required for traditional securities.

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Carpentier continued:

“At launch, we would also make the offering only available to accredited investors within the limits of our own market. Our planned framework with the SEC would also allow secondary market trading in our market. “

Carpentier told UKTN that by tokenizing real estate equity, Vesta “converts the financial rights associated with the traditional and real asset into a token that can be processed digitally and enjoy benefits such as liquidity, transaction speed. and transparency.