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Locking investable assets to the blockchain is a common pursuit in today’s crypto world. While there are many benefits, the most notable ones are improved accessibility, reduced friction and fees, and the possibility of splitting illiquid assets, but there are also many challenges.
Brightvine, a blockchain-based investment platform that connects scrutinized issuers of real-world assets to digital investors, is one such company tackling this challenge. Today, they announced a partnership with AngelOak Ventures, the technology venture division of AngelOak Companies, which works on innovative mortgage solutions. The partnership aims to leverage Brightvine’s platform in exploring new investment tools for investors.
With the successful integration of real estate and blockchain, it is useful to think about the impact on the wider financial markets. The infamous illiquid and inaccessible real estate market can be transformed if someone can crack the way these assets are successfully tokenized. We interviewed Brightvine CEO Joe Vellanikaran to get answers on why this is such a challenge, progress, and exactly what this partnership with Angel Oak entails.
CoinJournal (CJ): People have long dreamed of real estate living on the blockchain, but so far progress has lagging behind other sectors in the crypto. What do you think is the reason?
Joe Veranicaran (JV): There are two main reasons. The real estate industry is less aware of the benefits of blockchain and the infrastructure that supports real estate tokenization is poor. The real estate industry is highly sophisticated, with well-trained and economically savvy individuals taking advantage of many of the options that currently exist to fund their investments. However, most people do not seem to be aware of the benefits that blockchain brings to real estate. For example, reaching a wide range of investors increases liquidity, and automating redundant features through smart contracts increases efficiency. Cryptocurrencies and blockchain have been around for over a decade, but there is still no technical solution to properly assess the dynamics and nuances of the real estate industry. That’s where Brightvine comes in.
CJ: The press release outlines reducing “traditional secondary market friction” as an advantage of the tokenized approach. Can you elaborate on what you mean here?
JV: Despite being many times larger than the stock market, there is no NYSE for mortgages, real estate and fixed income products. The sale and transfer of these assets is privately negotiated and requires considerable due diligence and transfer costs. Brightvine enables seamless transfer of asset tokens between trading parties while reducing audit costs through blockchain-based validation of documents and data.
CJ: What demographics are you targeting in the Angel Oak partnership? DeFi investors are trying to diversify their portfolio by adding real estate exposure, but will they stay within the territory of cryptocurrencies?
JV: That said, it also targets traditional financial institutional and accredited investors who are considering investing in asset classes that are too difficult to audit and track without Brightvine.
CJ: Does this make real estate investments more accessible, given that large, illiquid investments can usually be fragmented on the chain?
JV: yes. Allows fixed income and real estate asset managers to use tokens to raise funds from blockchain-based investors. These funds are usually funded by large institutions and are rarely traded. Tokenizing funds will give a wider investment base access to these high-performance alternative asset classes. These classes are usually closed to most investors.
CJ: What do you think is the biggest motivation for investors to invest in tokenized real estate assets instead of the traditional trad-fi route? Or is this just for investors who can’t access such vehicles outside the crypto?
JV: The biggest motivation is access and flexibility. This route not only enhances portfolio selection and customization, but also provides the ability to easily trade tokenized assets in the secondary market.
CJ: I joined the waiting list to join Brightvine. Why is there a waiting list and when do you plan to open it?
JV: This year, we will launch a platform that will allow investors to buy and bet on digital assets at Brightvine.
CJ: Will Brightvine continue to focus on real estate or are there plans to tokenize more asset classes?
JV: Brightvine is currently focused on the mortgage, fixed income and real estate industries, but we are constantly exploring new possibilities and looking to pursue other asset classes in the future.
CJ: How can a mortgage issuer profit from your product?
JV: Mortgage issuers have access to the Brightvine Portal, a secure management platform that improves the efficiency, security and liquidity of mortgages and MBS. Loan originators and issuers tokenize real financial products into digital assets, enabling easy transfer of validated data to third parties such as investors, broker-dealers and RIA. In addition, issuers use the Brightvine Portal to coordinate and implement the primary provision of digital assets to investors.
CJ: What do you think the future of tokenized stocks will be? Do you think either tokenized stocks or real estate will become mainstream and pull capital away from the trad-fi sector?
JV: I strongly believe that trad-fi and DeFi will eventually merge. Trad-fi is full of incredibly intelligent, diligent and knowledgeable investment professionals. It may take some time, but I think the industry will adopt blockchain to enable all asset classes from equities to fixed income. Ultimately, we won’t even talk about tokenization. It’s just a technology that drives new financial markets that are more efficient, transparent, fluid and accessible.
CJ: Are there any concerns surrounding the regulation here? For example, tokenized stocks and other similar securities are under close scrutiny by the authorities as to whether they represent securities. Does this affect Brightvine or its investors?
JV: We respect and encourage industry regulations. As a result, compliance is at the heart of Brightvine’s products and products. All securities offered by Brightvine comply with the appropriate guidelines of the appropriate regulator.
CJ: Originally from Ireland, it has been very difficult for young people to get a mortgage since GFC, and many have been trapped in renting. A somewhat fictional question, do you think tokenized real estate and mortgages could ultimately alleviate this problem?
JV: Yes! Let’s say the Irish public is interested in improving home ownership across the country. They can create and fund a blockchain-based liquidity pool to buy Irish borrower mortgages algorithmically. This product increases the liquidity of mortgages, and the immutable ledger of validated data reduces the costs associated with mortgages. By increasing liquidity and reducing costs, borrower pricing is improved. Better pricing means more people are eligible for a mortgage, which in turn improves home ownership.
In addition, fund investors may receive greater returns than if they left the fund in the bank. Brightvine plans to launch a product to address this issue later this year.
