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Institutional Investors Eye Blockchain-Tokenized Commercial Real Estate

Institutional investors are poised to purchase blockchain-tokenized shares of high-value commercial real estate once more opportunities arise, according to Kunal Bhasin, digital asset co-lead at KPMG Canada.

At the Toronto Collision Conference, Bhasin told Cointelegraph that tokenization has the potential to shift the ownership landscape of major commercial buildings, which traditionally have been the domain of wealthy real estate and pension fund managers.

Tokenization could allow institutional investors, including family offices, to own portions of significant properties such as Toronto’s Eaton Center and other major buildings.

“Tokenization of commercial real estate can actually enable that,” Bhasin stated, predicting it would become a major institutional use case in the crypto industry.

However, Bhasin highlighted that many “institutional DeFi” participants prefer a more controlled environment.

“Institutions recognize the efficiency that decentralized financial technology brings, but they want to know the participants that they are interacting with,” he said, emphasizing the importance of know-your-client checks in this process.

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The adoption of tokenized real estate is gradual. In April, Bitfinex Securities facilitated a tokenized asset raise for a 4,500-square-foot Hampton by Hilton hotel at El Salvador’s international airport, but it has raised only $342,000, far short of its $6.25 million goal.

Bhasin also anticipates growth in tokenized Treasurys and money market funds.

He cited the success of the BlackRock USD Institutional Digital Liquidity Fund (BUDIL), which has reached $462.7 million in value since its launch in March, according to 21Shares data.

Despite these advancements, reputational risks remain a concern for asset management firms and banks hesitant to engage more actively in the crypto space due to numerous frauds and scams.

Bhasin noted that while “there is fraud in every industry,” recent progress is encouraging. KPMG uses blockchain analytics from Chainalysis to detect potential illicit activities tied to its clients.

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

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

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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