Italian startup BlockInvest will tokenize non-performing loans (NPLs) in two projects, the first of which will be a proof-of-concept, and the second will tokenize Italian mortgages in default. The Italian NPL market is worth tens of billions of euros, peaking at 360 billion euros in December 2015 ($391 billion at the time), but it has since reduced.
BlockInvest will partner with Milan-based securitization consultant 130 Servicing in a proof-of-concept to issue native digital asset-based securities notes directly on-chain as a run-up to its main goal. After that, it will work with credit management company Davis & Morgan, which is also based in Milan, to tokenize distressed real estate credits acquired by that company to enable tokenization of financing agreements and related instruments.
Tokenization will provide fractional ownership, enhanced liquidity and a more accessible and better managed market, BlockInvest said. BlockInvest, which is backed by the Credit Agricole Italia bank, uses Polygon technology. According to a statement:
“The goal of bringing these assets on-chain is to minimize the impact of non-performing exposures on the institution’s financial stability and to restore the health of the loan portfolio.”
The Italian NPL market has been a matter of concern for several years. In a report released on Jan. 18, the Financial Stability Board (FSB) said legislation introduced in 2016 has reduced the volume of NPLs but mainly left complex “not likely to pay” loans outstanding.
— Meet the Drapers (@meetthedrapers) October 6, 2023
The FSB urged the Italian government to continue fostering the market, upgrade the court system to facilitate NPL settlement and dedicate more human resources to the problem.
Italy has one of Europe’s most developed crypto regulatory frameworks.