Institutional DeFi players will bring commercial real estate onchain: KPMG exec

Avatar

Institutional investors will buy blockchain-tokenized shares of high-value commercial real estate when more opportunities come, says Kunal Bhasin, a digital asset co-lead at KPMG Canada.

Tokenization could change the owners of big commercial buildings — historically confined to deep-pocketed real estate and pension fund managers, Bhasin told Cointelegraph at the Toronto Collision Conference.

The tech could see institutional investors, like family offices, able to own a slice of Toronto’s major shopping mall, the Eaton Center, and other big buildings.

“Tokenization of commercial real estate can actually enable that,” Bhasin said. He predicted it would become one of the crypto industry’s biggest institutional use cases.

Cointelegraph’s Sam Bourgi (left) speaking with KPMG’s Kunal Bhasin (right) at Toronto’s Collision Conference. Source: Cointelegraph

But Bhasin noted many of these “institutional DeFi” players would prefer to transact in a more permissioned environment.

Institutions recognize the efficiency that a decentralized financial technology brings, but they want to know the participants that they are interacting with.”

Know-your-client checks would also be an important part of that process, Bhasin said.

Tokenized real estate is slowly being adopted.

Bitfinex Securities facilitated a tokenized asset raise for investment into a 4,500-square-foot Hampton by Hilton hotel at El Salvador’s international airport in April — but it’s only managed to raise $342,000 so far, less than 6% of its $6.25 million goal.

Tokenized Treasurys and money market funds were another bullish use case that Bhasin expects to expand more in the near future.

He noted the relative success of the BlackRock USD Institutional Digital Liquidity Fund (BUDIL), which has amassed $462.7 million in value since it launched in March, according to data compiled by 21Shares.

Reputational risk holds back institutions, but that’s improving

Asset management firms and banks are still worried about becoming more active in the crypto space due to the spate of frauds and scams, Bhasin noted.

The “reputational risk” in that sense still lingers, but there has been recent progress.

Bhasin said KPMG leverages infrastructure from blockchain analytics firm Chainalysis to identify potential illicit activities that may be tied to its client base.

Related: Canada lacks engagement from lawmakers on crypto — Coinbase exec

“There is fraud in every industry,” he said, but banks would be more likely to work with industry players that implement the necessary infrastructure and best practices to identify any illicit activities.

“Soon, not being involved in crypto and digital assets is going to be a career risk,” Bhasin said.

“If you are not offering it today, your competitors are — and they are getting that advantage over you.”

Magazine: Longevity expert: AI will help us become ‘biologically immortal’ from 2030

Additional reporting by Sam Bourgi.