Institutional DeFi players bring commercial real estate onchain: KPMG exec

As more opportunities arise, institutional investors will buy blockchain-enhanced high-value commercial real estate stocks, says Kunal Bhasin, associate head of digital assets at KPMG Canada.

Tokenization could transform the owners of large commercial buildings — historically limited to deep-pocketed real estate and pension fund managers, Bhasin told Cointelegraph at the Toronto Conflict conference.

The technology can accommodate institutional investors such as family offices in Toronto's flagship mall, the Eaton Center and other large buildings.

“A commercial real estate token can really enable that,” Bhasin said. He predicted that it would be one of the crypto industry's biggest institutional use cases.

But Bhasin says many of these “institutional def” players prefer to trade in a more sanctioned environment.

“Institutions understand the efficiency that decentralized financial technology brings, but they want to know that they are communicating with participants.”

Know Your Customer checks will be an important part of that process, Bhasin said.

Tokenized real estate is slowly being adopted.

Bitfinex Securities in April facilitated a virtual asset raise to invest in a 4,500-square-foot Hampton Inn at the Hilton Hotel at El Salvador International Airport — but has so far raised $342,000, less than 6% of its $6.25 million goal.

Tokenized Treasurys and money market funds were another mass use case that Bhasin expects to expand further in the near future.

Since its launch in March, the $462.7 million BlackRock USD Institutional Digital Liquidity Fund (BUDIL) has been a relative success, according to data compiled by 21Shares.

Reputational risk is holding institutions back, but that is improving.

Asset management firms and banks are still worried about becoming more active in the crypto space due to fraud and fraud, Bhasin said.

The “popularity risk” in this regard still persists, but there has been recent progress.

Bhasin said KPMG uses infrastructure from blockchain analytics firm Chainalysis to identify potential illegal activities linked to its client base.

Related: Canada lacks involvement in crypto – Coinbase exec lawmakers

“There is fraud in every industry,” he said, but banks can work with industry actors who implement the necessary infrastructure and best practices to identify any illegal activities.

“In the near future, not participating in crypto and digital assets will be a career risk,” Bhasin said.

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Additional reporting by Sam Burgi.