MAS advises caution on property related blockchain platforms

With two Singapore ‘proptech’ companies – FundPlaces and Reidao – turning to blockchain platforms to create property-backed tokens that can be acquired by investors, the Monetary Authority of Singapore (MAS) issued a caveat emptor (“Buyer, beware”), saying that such platforms may be used for criminal activity, reported The Business Times.

FundPlaces launched, three weeks ago, its real estate-backed cryptocurrency – Tiles, with each token entitling the investor to the cashflow of the underlying property investment which it references.

While FundPlaces uses the company’s own private blockchain platform, Reidao utilises the public Ethereum blockchain, which uses the gold-backed token called DGX.

Under Reidao’s process, the company liquidates the full amount for the property that has been raised in tokens to acquire the said asset in the local fiat currency.

During distribution, the company converts cash back to gold and to DGX, which would then be paid out to token holders.

Recognising the risk that ‘dirty’ money may be laundered via their platforms, both FundPlaces and Reidao have set up due-diligence and know-your-customer (KYC) processes at the pre-registration phase.

FundPlaces, for instance, requires its Singapore investors to open a local bank account. But while it is a little less risky now, FundPlaces co-founder and chief executive Brian Wee expects the risk to become higher once the company start going overseas.

“The anonymity afforded by such new technologies and products, as well as the potentially wider reach at faster speeds, could certainly allow criminals to abuse them to cloak their illicit activities and gains,” noted a MAS spokeswoman.

“Whether the offer and exchange of digital tokens on blockchain-enabled platforms constitute an activity to be regulated by the MAS depends on the facts of the case. MAS is closely watching this space.”

This article was edited by Denise Djong.