Cryptocurrency transactions may soon be a common tool in the real estate sector if developments in South Carolina are anything to go by. Harbor is the company planning to allow people use asset-backed digital tokens to invest in commercial properties.
Crypto Real Estate Sale
In partnership with Convexity properties, Harbor has unveiled a sale of digital tokens for commercial properties. People will be able to use the tokens to own a piece of a luxury dorm in a student-housing complex in the state. Convexity owns a student-housing complex near the University of Carolina that will go on sale using security digital tokens. The real estate investment arm of trading firm DRW intends to sell a minority stake in the building. The firm expects digital token proceeds of at least $15 million on the sale.
The two companies intend to issue 955 tokens priced at $21,000 a piece. People who purchase the tokens will own a fractional of the property (dorms) up for sale. Potential investors can also purchase the tokens using other digital assets. For starters, the firms will accept Bitcoin (BTC) and Ether (ETH) payments. The property sale targets investors in the U.S. as well as other countries including Singapore, Hong Kong, and the Cayman Islands. The fundraising will also target high net-worth investors with an income of more than $200,000 or those with a net worth of more than $1 million.
In a bid to enhance the legitimacy of the token offering, Harbor has already engaged the services of a big accounting firm. The company has also contracted an IT security firm to audit the smart contracts for the security tokens up for sale. A quality custodian is also in place to create and oversee the crypto wallet service.
Security Tokens Growing Popularity
The token sale is similar to an Initial Coin Offerings (ICOs). However, it will meet regulatory compliance. Harbor intends to force compliant transfers through smart contracts between buyers and sellers Offering the tokens as securities should help the two companies avoid regulatory scrutiny. Unlike ICO tokens, security tokens generate their value from tangible assets. In the case of Harbor sale, the token will accrue their value from the real estate property up for sale. The security tokens will also be subject to securities laws as well as regulations, which enhance their credibility.
The idea of tokenized securities is starting to gain momentum. Companies are increasingly using digital tokens to represent a subset of their underlying assets. The fact that the tokens are encoded in a smart contract allows for their trading on a blockchain-powered exchange.
Crowdsourcing platform Indiegogo has already leveraged the power of security tokens. The firm helped a luxury hotel in Aspen those $18 million on the issuance of security tokens.