A Short Report: Securitize

shortsegments (77)adminin Banking and Finance • 5 years ago (edited)

Securitize

Securitize is an innovative global fintech company focused on digitizing assets on the blockchain. The company was founded in November 2017, with offices in San Francisco, New York City, Tel Aviv, and London. Source

The focus of this company is on digitizing assets like real estate. They call the process “Securitization” which means to make something like a security, in the context of making it easily traceable. But they also have to perform another transformation of sorts, called “Digitizing” which means to take the Securitized real estate and wrap it in a digital wrapper, so it can represented digitally and traded. Thus the overall goal is remove barriers to accessing the equity by securitizing, digitalizing and fractionalizing the real estate asset. The pool of potential buyers for multi-million dollar pieces of real estate is not large, even world wide, and investing all ones investment capitol is a significant investment risk. So the last part of this process called fractionation, reduces risk exposure for large investors, and increases access for smaller investors, along with increasing odds of success for the asset owner to successfully raise capitol. This creates a scenario where all parties asset owners, asset investors and deal facilitators can win.

The firm securitize hires third party companies to oversee two other important functions custodianship and a new term called the oracle. The custodian traditionally takes custody of the asset and verifies its authenticity in the case of art, and the title in the case of real estate. Then insures it’s safe keeping either in a vault or other secure location. The beauty of digital trading is that while ownership may change hands the asset doesn’t have to move. The oracle is a company which monitors the appropriate markets the asset is valued in to insure the assets value always remains above the value of the digital coins which represent it.

Lastly, an important function that Securitize performs is legal compliance. Mainly assuring that the process of picking investors is done in a “Compliant” manner, which means following USA Securities laws. Or other countries similar laws if the transaction will fall under their jurisdiction. Incidentally they are not based on the a Ethereum blockchain.They use the TEZOS blockchain.

✍🏼 written by Shortsegments

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