The government of São Paulo, Brazil has recently made a decision to prohibit the registration of documents linking tokens to real estate properties, in response to a request from a group of registrars. This action has effectively put a stop to a market that was operating in a gray area, and now awaits proper regulation.
Registration of Real Estate Tokenization Projects Halted by São Paulo Government
The city of São Paulo, Brazil, will no longer be registering tokenized real estate properties.
According to a report by Valor Econômico, the General Inspector of São Paulo, Francisco Eduardo Loeiro, has issued a decree to prohibit the registration of any property linked to a blockchain token. This decision is being seen as a win for notaries over companies involved in real estate tokenization.
This recent move follows an earlier nullification of a resolution issued by the Federal Council of Real Estate Brokers (Cofeci) that aimed to regulate the sector.
Flaviano Galhardo, the executive director of the National Operator of the Electronic Real Estate Registration System (ONR), supports this decision, as it helps to clarify the economic rights of real estate token holders by distinguishing token ownership from actual ownership.
Galhardo emphasized, “The token can represent investment contracts or financial instruments, but it cannot mislead people into believing that it represents true ownership of a property.”
He also expressed concerns that introducing a parallel token system could potentially compromise the security of the longstanding legal system that the real estate registry is based on.
In his assessment, Galhardo stated:
“The real estate registry is the cornerstone of the entire real estate production chain, encompassing civil construction and real estate credit. The entire system relies on the security provided by property registration.”
The ONR has urged the National Council of Justice (CNJ) to establish regulations for real estate tokens, but no action has been taken yet. This move by the general inspector is viewed as a step back by industry insiders, as it halts an industry that was already operating in a gray area without offering any solutions.
The residential real estate market in Brazil currently has a market capitalization of over $106 billion and is projected to grow to nearly $139 billion by 2031, according to Mordor Intelligence.
Read more: Brazil Streamlines Rules for Banking Institutions Entering The Crypto Market
FAQ
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What recent decision did São Paulo make 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 prohibit tokenized property registrations?
The decision was made by the General Inspector of São Paulo, Francisco Eduardo Loeiro. -
What concerns did experts raise about real estate tokens?
Experts argue that tokens can’t convey true ownership rights and could undermine Brazil’s traditional property registry system. -
What is the current status of the real estate sector in Brazil?
The residential real estate market in Brazil is valued at over $106 billion, with projections to reach nearly $139 billion by 2031.