blockchain-enabled tokens on a limited basis will be listed on major
exchanges, including Nasdaq early as Q4 2020.
Similar developments will happen globally as well. Shtofman
notes his sources say that SIX Group, the Swiss stock exchange, will
begin trading tokenized assets in Q3 2019.
SIMPLIFYING THE PROCESS
Some companies are taking steps to ease this process as much as
possible. San Francisco-based company, Harbor provides an online
platform that tokenizes alternative investments including real
estate, investment funds and private equity. Founder and CEO Josh
Stein explains that his company provides greater liquidity using
blockchain for private placements.
Similar to Fawer, Stein describes the current cumbersome pri-
vate sale process: “Oh, it’s brutal. It’s people trading documents
back and forth and signing and scanning and emailing again. It’s
all fragmented, stored on Excel spreadsheets or in people’s email
boxes. There are some software tools out there but they only do
one part of the process and there’s no marketplace where it’s easy
to trade these things.”
No matter whether an investor forms a REIT or uses a syndi-
cated structure, there are 10 to 200 people in a series with private
securities that are exempt from registration, he says. Stein calls it
“a giant paper drill.” Someone needs to keep track of who has
signed the documents, who wired money and whether the sent
amounts matched the person’s commitment. Sometimes people
sign the documents but don’t wire the money or wire the wrong
amount or fail to sign the documents or sign the wrong version of
With Harbor, clients receive an email with a link, set up an
account (similar to online banking, with a username, email address
and password). They’ll receive a non-disclosure agreement to elec-
tronically sign, then will be directed to a data room. The website
describes the investment and walks clients through the materials,
including the private placement memorandum. Harbor provides a
subscription agreement and performs automated Know Your
Client and Anti-Money Laundering compliance checks. Online,
the entire process expands the global reach of raising capital.
Stein sees this “low friction” blockchain process a game changer
in how private placements will be handled in the future.
With this plethora of approaches and the potential of massive amounts
of red tape, why would investors even bother with tokenization?
The oft-cited—and quite viable—reason is that tokenization opens
the doors to all sorts of investors new to commercial real estate.
“Maybe family offices who don’t want to write a $25 million check, will
want to write a $500,000 check,” says Deloitte’s Shtofman. “A tokenized
offering can open up a new potential capital pool of investors.”
So far, the industry has only seen trial runs, but Shtofman
expects that to change. He says that 2018 was the year people test
out the technology. 2019 is shaping up to be the year companies
will look at the technology’s actual value. As for 2020—it will be the
year of adoption. ◆
THOUGH T LEADERSHIP
CUS TOM CONTENT PROGRAM
For more information contact Peggy Schecter at (212) 457-9509 | email@example.com or visit www.globest.com