The government of São Paulo, Brazil, has banned the registration of documents linking tokens to real estate at the request of a group of registrars. This action brings to a standstill a market that operates in a gray zone and which now has to wait for proper regulation.
Registration of real estate tokenization projects halted by the government of São Paulo
The city of São Paulo in Brazil will have to stop registering tokenized real estate.
According to Valor Econômico, the General Inspector of São Paulo, Francisco Eduardo Loeiro, has decided to ban the registration of properties linked to a blockchain token, a decision considered a victory for notaries over companies involved in the tokenization of real estate.
The decision follows an earlier withdrawal of a resolution by the Federal Council of Real Estate Agents (Cofeci), which aimed to regulate the sector.
Flaviano Galhardo, executive director of the national operator of the Electronic Real Estate Registration System (ONR), agrees with the outcome, saying it clarifies the economic rights of real estate token holders, separating token ownership from real ownership.
“The token can represent investment contracts or financial instruments, but it cannot lead people to believe that it is a real ownership right to a property,” he stated.
According to Galhardo, the introduction of a parallel token system could undermine the security of the 180-year-old legal system based on the traditional real estate register.
He assessed:
“The current real estate register is what provides ballast to the entire real estate production chain, ranging from civil construction to real estate loans. Everything is built on the security of the real estate register.”
The ONR has asked the National Council of Justice (CNJ) to issue a regulation for real estate tokens, but this has not happened. The move by the General Inspector is seen as a regression by insiders as it halts an industry that is already operating in a gray zone without providing any solution to the problem.
The market capitalization of Brazil’s residential real estate sector is over $106 billion and is expected to grow to nearly $139 billion by 2031, according to Mordor Intelligence.
Read more: Brazil is streamlining rules for banking institutions entering the crypto market
Frequently asked questions
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What recent decision has São Paulo made regarding tokenized real estate?
São Paulo has halted the registration of properties linked to blockchain tokens, marking a setback for real estate tokenization. -
Who decided to ban tokenized property registrations?
The decision was made by the General Inspector of São Paulo, Francisco Eduardo Loeiro. -
What concerns have experts expressed about real estate tokens?
Experts argue that tokens cannot convey real property rights and could undermine Brazil’s traditional property registration system. -
What is the current status of the real estate sector in Brazil?
Brazil’s residential real estate market is valued at over $106 billion, with projections of nearly $139 billion by 2031.