Real Estate Tokenization

We can help tokenize real estate, i.e. create a blockchain token to represent real property ownership interests.

This entails going about it one of two ways; 1) creating a blockchain smart contract representation of your real estate deed/rights/ownership interest , 2) creating a blockchain entity special purpose vehicle that holds deed to the property.

To learn about blockchain in general, please visit our about blockchain page.

Why Tokenize?

Tokenization can increase liquidity, bypass legacy middlemen, and allows fractional or shared ownership. It improves efficiency, record and transaction security and control over real property assets.

For real estate investments, tokenization or utilizing a smart entity may be superior to using a standard REIT (Real Estate Investment Trust) or other special purpose vehicle (“SPV”) structure. Debt or equity may be tokenized. A smart contracts programming can enforce jurisdictional regulations like limits on non-accredited investors, holding periods, KYC/AML checks, (know your customer, anti money laundering).

A person selling a complete piece of real property to another person (or entity) in a private sale via blockchain may not trigger securities laws.  An attorney from Allomer Law Group PC will be able to guide clients on a case-by-case basis.

Having an attorney involved that understands the technology in this type of legal and technical process can be crucial. There may be criminal and civil liability for regulatory violations. Tokenizing real estate or a SPV does not end-run securities or tax regulations. The token is a security if the economic realities amount to an “investment contract” under the Supreme Court’s “Howey test” (SEC v. W.J. Howey Co.,328 U.S. 293 (1946).

It isn’t a problem if the token is deemed a security. Our legal and technical process was designed specifically to create and manage security tokens. Including the industrial grade blockchain system we will utilize to assist you.

Although tokenization is not a loophole to avoid tax or regulatory liabilities: It is a good means by which to manage, own, and transfer real property interests. Its immediate and long term benefits are why blockchain is the largest disruptor in real estate and fintech in the last 20 years.  A digital infrastructure paradigm shift is underway.

The security token standard used (ERC-1400) released in 2018 quickly became a widely adopted standard. The old ERC-20 token standard did not support transfer restrictions and was not as capable.

Using a modern industry standard token that is modular, ensures the flexibility and interoperability to accommodate clients in different jurisdictions, and adjust with changes in regulation.

Schedule a consultation to discuss your best course of action.

How does this work?

As mentioned on other services pages, in Stage 1, we create or transform you into a smart company, essentially a business entity with its companies ownership interests tokenized (stocks or membership units).

Then Stage 2– is the security token offering, or STO.

There are several avenues of depending on what development stage your company is in, and what type of investors you would like to have. (Full IPO / registration, or exemptions to Securities Act registration via Regulation D, S, CF, and/or A+.)

You may sell shares to private U.S. investors with Regulation D, 506(b) or 506(c), and foreign investors with Regulation S.

Take advantage of public crowdfunding via Reg CF to raise up to 5 million, or use Regulation A+ for a public offering to raise up to $75M in a “mini-IPO”.

The first SEC registered digital token IPO on the blockchain was May 3, 2021, (INX Ltd.) and brought clarity to the blockchain industry as it intersects with securities law.

Your Allomer blockchain attorney will ensure the tokenomics are planned well, and correct SEC paperwork is filed. Each Regulation option has its own flat fee.