German Regulator BaFin Approves €250 Million Ethereum-based Real Estate Bond

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by Bhushan Akolkar · 3 min read
German Regulator BaFin Approves €250 Million Ethereum-based Real Estate Bond
Photo: Pavlos Giorkas / Flickr

The Fundament Group said that this will be the first-ever standardized and regulated security token backed by real-estate allowing users to trade global properties without any interference from the banks.

Over the last few years, the global real estate industry is working towards implementing the blockchain technology at their end. The reason is very simple! Compared to the traditional SWIFT bank transfers, the blockchain tech facilitates quick and easy transfer of money at very low transaction costs.

Recently, Germany’s financial regulator BaFin has approved a blockchain-based real estate bond worth a massive €250 million. Fundament Group, a security issuance company has designed his bond which carries a portfolio of real estate property across entire Germany.

The Fundament Group said that this is the first-ever standardized and regulated security token backed by real-estate. It adds that the security token facilitates trading real-estate globally without any interference from the banks. The official press release notes that the company will major focuses on properties located in Germany’s urban cities like Rockstock, Berlin, Jena, Hamburg, and Fulda.

With this project, the company plans to bring additional liquidity to the currently illiquid real-estate industry.

Details of the Ethereum-based Real Estate Bond

The Fundament Group stated that the bond shall be structured as ‘subordinated token-based bonds with annual variable interest rates’. Being an Ethereum-based bond, the real-estate-backed security tokens will be ERC20 tokens and will supposedly give the investors returns between 4-8% per anum.

The dividends (if any) based on the performance of the portfolio shall be issued annually. All the existing investments will mature after 15 years in 2033 wherein all the investors shall be returned their base investments.

You can read the completely available prospectus released by the Fundament Group here.

Furthermore, issuing the bond on Ethereum gives a huge boost to the blockchain platform which has been recently struggling with some scalability issues. Ethereum is all set to undergo a major transition to Ethereum 2.0 in January 2020 which will host novel features while simultaneously solving the scalability and network performance issues.

Florian Glatz, the co-founder of the Fundament Group said:

“As the first company to receive approval from the German Financial Market Authority for a blockchain-based real estate bond, we are excited to enter the sales process for the Real Estate Security Token, while already preparing the tokenization of other highly attractive assets.”

In a word with CoinDesk, Glatz further added:

“The reason we went through this long tedious process with regulators was to get rid of any restriction. Normally these projects are limited either by the minimum investment amount, which would be north of €100,000 or limited heavily in the amount of investors you could have. So it’s the first really like mass-market tokenized real estate for the world.”

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