Germany Approves First Real Estate Bond Token

Germany’s financial regulators have approved their first real estate-backed token sale. BaFIN approved Fundament Group’s $280 million sale of a bond token backed by real estate in Germany. Investors can purchase the token using fiat currency, Bitcoin, or Ether. For purchases made using fiat currencies, the token will be delivered in a hardware wallet. It is backed by investment in five construction projects – three in Hamburg, one in Frankfurt, and another one in Jena.  

According to Fundament, the real estate portfolio will total more than 680,000 feet upon completion. Returns promised for the portfolio are between four to eight percent until 2033. At that point, the bondholder will receive the full amount of their initial investment back. Fundament has said that it will not use an investment bank and will distribute the securities itself to “lower issuance costs and increase returns.”     

BaFIN confirmed approval of the real estate bond token to Coindesk. “It has indeed been the first time we have approved a prospectus regarding blockchain-based real estate bonds, but not the first time in respect to blockchain technology as such,” the agency stated.

Florian Glatz, cofounder of the platform, told the same publication that the process for approval took seven months of work. “Every two or three weeks you get 20 pages back from the regulator of things you have to change, and so on, back and forth over a period of months and it ends up being like a book. Ours has close to 100 pages,” he said.

While there have sales of other real estate-backed tokens in the past, they have been mostly to accredited investors or institutional firms. The Fundament Group’s sale does not have income requirements for investment. Glatz called the offering a sale of the world’s first “mass-market tokenized real estate for the world.”