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Crowdfunding platform becomes first to tokenize property in the UK

A new, unique platform for crowdfunding investment was recently launched by Smartlands, with the company becoming the first to tokenize property in the UK.

Smartlands, the first regulated blockchain-based crowdfunding company in the UK, ‘enables fractional ownership in virtually any asset class making institutional-grade investment opportunities available to investors via an unprecedentedly low buy-in’.

The firm says the growing demand for alternative income and the arrival of blockchain technology are both challenging the ‘traditionally closed institutional investment club’.

It argues that, until now, the sky-high minimum threshold for investment, soaring fees and complicated structures with multiple intermediaries have been making investing practically inaccessible for the average individual.

Smartlands is now seeking to disrupt ‘legacy financial markets’ with its blockchain-based ‘Platform’ for crowdfunding, which has been designed to democratise the global investment space by introducing the concept of fractional ownership through the use of security tokens. While tokenization is already more of a thing in places like the US, it’s yet to really catch on in Britain despite a rising awareness of cryptocurrency and blockchain.

Smartlands’ proprietary technology allows issuing digital shares in the form of security tokens, backed by real economy assets such as real estate, agriculture or private equity. As with a traditional form of the stock market, security tokens ‘represent the immutable right of ownership in an asset’ and enable investors to receive dividends or profits. 

According to the firm, which was founded in 2017 and is based in London, the advantage of digitising securities is that they ‘become highly divisible, unlike traditional shares, meaning that investors can buy small percentages of tokenized assets’.

This model, it adds, dramatically lowers the buy-in threshold and opens access to higher-yield investment opportunities.

“Imagine, you can now own the equivalent of just one square meter in a building and have the option to trade that share on an exchange 24/7,” Smartlands chief exectuive Arnoldas Nauseda said. “Both fiat (state-issued) currencies and cryptocurrencies can be used to fund bids on Smartlands, making security tokens issued on our Platform a useful tool for portfolio diversification.”

He added: “For asset owners, it’s an alternative way to raise capital from an international circle of investors, adding liquidity to the asset. Fractional ownership, enabled by asset tokenisation, will revolutionise the traditional investment space potentially unlocking a multi-billion global industry that previously has been out of reach.”

Registered with the Financial Conduct Authority (FCA) in the UK, Smartlands will offer investment opportunities in various asset classes, beginning with real estate.

“We spent almost two years building a solid legal and business foundation to launch Smartlands,” Nauseda continued.

“We’ve developed a platform that employs advanced blockchain technology with fast, cheap, and secure transactions. We’ve gathered a team of visionaries and executives who come from traditional finance, banking, real estate and software engineering, united by the idea to shape the future of investment through innovation. And finally, we created a legal framework for our business to make sure our investment offerings are fully compliant. Now, having done our homework, we’re excited to launch.”

In May 2019, Smartlands – which also has an office in the Lithuanian capital Vilnius - announced its first Security Token Offering (STO), a public sale of shares in a student accommodation complex in Nottingham.

It’s estimated that investors will secure a forecasted average dividend yield of around 5.74% per year, as well as a forecasted return of 15.72% per year including capital growth.

Constructed in the third quarter of 2018, the purpose-built student block contains 124 apartments and is fully occupied for the current academic year 2018/19. The complete details of the offering can be seen here.

Smartlands’ VP of technology, Ilya Obraztsov, said at the time: “The student complex in Nottingham is the first tokenized property in the UK, to be followed with new offerings of blockchain-based securities backed by assets in real estate and other markets.”

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