Alternative Asset Tokenization

Deloitte - The Dots Luxembourg - Alternative Asset Tokenization

Here’s a shoutout to Wednesday’s Finverse Forum at The Dots Luxembourg! It was a pleasure to sponsor this stellar metaverse event around alternative asset tokenization platforms and technology enablers.

Let’s give a hand to Thibault CholletJean-Paul ScheurenGabriel Übleis, CAIADominik KaraAntonio V., Otto NinoJohn Cronin and Florian Le Goff for providing lots of food for thought.

Blockchain startup to help SMEs access ESG capital

Blockchain startup to help SMEs access ESG capital

Blockchain startup to help SMEs access ESG capital

Small and medium enterprises are seen as the backbone of the net zero approach to the climate. But the vast majority of them lack the financing to implement their environmental, social, and governance ( ESG) programmes. A New York City based start-up named Marco Polo Exchange (MPX) is rolling out its POLO marketplace to help at least 150,000 SMEs overcome these challenges. 

As part of this, MPX has announced plans to invite this September a handful of global institutions such as investment banks, asset managers, impact capital funds and ESG standard boards to become early adopters of the solution.  The company has also announced the launching of the POLO platform at year end, with an initial focus on Brazil, which is a global leader in ESG products & issuance.

“SMEs or small and medium enterprises, as you may know, have big challenges in terms of accessing technology and appropriate infrastructure to access funding that will allow them to become ESG compliant and lower their carbon footprint,” said Otto Nino, MPX’s chief product officer, at the May Finverse Forum event in Luxembourg.

Lacking proper resources

Nino presented a survey from the SME Climate Hub that shows that almost 70% of world-wide SMEs “do not have the proper resources to implement their ESG compliance programmes.” Partly this is due to constraints involving regulatory barriers or adequate infrastructure to access liquidity from worldwide investors facing SMEs.

To resolve this problem, MPX has created a platform bringing together its regulatory licenses and blockchain. “This is the first online blockchain-driven platform that allows local investment managers or issuers of financial assets to embed, meaning incorporate the ESG criteria, and ESG compliance into the assets via the tokenisation of such assets.”

Nino outlined a use case involving and SME that wants to change its energy usage. “And they’re situated in Australia, but the main pool of funding that could be available or interest in investing in a project like that sits in Luxembourg or the US or the UK,” Nino explained. “Without the proper technology channels, those issuances or that need for capital and funding will not be seen by this by those investors.”

Cumbersome & costly

He explained that the SMEs also need help to overcome regulatory barriers that might impose many “cumbersome and costly” processes in order to access the funding.

What the POLO platform does, Nino explained, is streamline the primary issuance of the securities; capital issuance and their distribution. He said tokenisation adds a lot of value, and that later, secondary trading “will enable the liquidity for those financial assets issued by SMEs”.

“Basically what we’re doing is combining in one single environment online with the help of blockchain, the regulatory compliance, the ESG compliance and the reporting and distribution for the investor community around the world.”

Nino pointed out that ESG compliance has faced serious challenges as to the validity and certification of such assets. “Blockchain, via the decentralisation and consensus mechanism, allows us to secure that certainty for the investors.” He added that blockchain’s ability to enable fractional ownership, which makes it more efficient and less expensive to be able to access investments or asset classes.

Smart contracts

Smart contracts, another feature of blockchain platforms, Nino explained, allow the incorporation of the characteristics and attributes that certify ESG compliance without the cumbersome and costly processes of other approaches. “It allows us to, as the volume grows, standardise what any ESG-certified security will look like and how it will be traded.”

Nino said smart contracts play a big role in permitting Polo to lower barriers, but also provides redundancy and technical transparency in term of the certification of the transactions. Blockchain allows us to have an audit trail giving certainty as to the immutability of the records. “So when we are portraying in our platform for an ESG SME issuer that an asset is ESG certified . . . there is certainty that that quality and that information will not be tampered with and is secure and easily accessible.

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SC Lowy

BEIJING/HONG KONG (Reuters) -China will launch a real estate fund to help property developers resolve a crippling debt crisis, aiming for a warchest of up to 300 billion yuan ($44 billion) in a bid to restore confidence in the industry, according to a state bank official with direct knowledge of the matter.

The move would mark the first major step by the state to rescue the beleaguered property sector since the debt troubles became public last year.

The size of the fund would initially be set at 80 billion yuan through support from the central bank, the People’s Bank of China (PBOC), the person, who declined to be identified due to the sensitivity of the matter, told Reuters.

He said state-owned China Construction Bank (OTC:CICHF) will contribute 50 billion yuan into the 80 billion yuan fund, but the money will come from PBOC’s relending facility.

If the model works, other banks will follow suit with a target to raise up to 200 to 300 billion yuan, he added.

A key pillar of the world’s second-largest economy, China’s property sector has been lurching from one crisis to another, and has been a major drag on growth over the past year. A revolt by homebuyers this month heaped more headache for authorities.

Some analysts said a fund would only provide part of the solution.

“We don’t know details of the fund yet. If just 80 billion it’s not enough to solve the problem,” said Larry Hu, chief China economist at Macquarie. “I believe the fund would be part of the bigger package to solve the current debt and mortgage crisis, because it alone would not solve all the problems … we need a real estate recovery.”

Reuters has reached out for comment from China Construction Bank, the PBOC and China’s cabinet, the State Council.

Global investors are fixated on any twists and turns in China’s property market, which along with related sectors such as construction, accounts for more than a quarter of the country’s gross domestic product (GDP).

The source said the fund will be used to bankroll the purchases of unfinished home projects and complete their construction, and then rent them to individuals as part of the government’s drive to boost rental housing.

Such a move would underline the importance the central government attaches to providing more affordable homes for young people at a time when some local governments have been reluctant to build rental housing because land sales are a major source of income.

Henan-government backed Zhengzhou Real Estate, which set up one of the first local bailout funds in the country last week with state-owned Henan Asset Management amid the mortgage boycott, plans to use 20 billion yuan to acquire 50,000 units and turn them into rental housing, according to a notice by the Zhengzhou authorities this month seen by Reuters.

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