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Will the Fed Kill Crypto? Real estate agents plot the future of Blockchain

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For blockchain technology to gain widespread adoption in an industry as large as real estate, a lot has to be developed first.

Blockchain asset prices are plummeting, processes remain complex, and the US government is considering new regulations, and even its own alternatives, for the existing list of private cryptocurrencies.

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But some real estate professionals believe that the fall of a variety of private tokens can only speed up the process of finding the winning products that could revolutionize the housing transaction.

Teresa Grobecker of Grobecker Holland International and Kevin Cottrell of eXp Realty will join a panel at Inman Connect Las Vegas in August to talk about their independent firm Real Estate Consortia and its work to standardize the role of blockchain in housing transactions. .

These two and their colleague Sheila Fejeran from eXp, all real estate professionals and Consortia executives, joined Inman on a video call before the conference. Their responses below have been edited for length and clarity.

But first, because this is a confusing and rapidly evolving space, let’s cover a few terms.

  • block chain — A blockchain is a shared record of something, distributed across a large number of computer servers. Because the process is decentralized, it is difficult for an outside actor to change the registry, for example by hacking into a single computer server. There are multiple applications of blockchain technology, including popular cryptocurrency and NFT assets. But these are not the only uses of the technology.
  • Non-fungible token — An NFT is a unique digital token that exists on the blockchain. It can be made to represent a real world or digital asset, and can be bought and sold. Some real estate has been bought and sold through an LLC tied to a specific NFT. In these cases, when the NFT changes hands, so does the ownership of the LLC and the property.
  • stable currency — Like a money market fund, these crypto assets are designed to allow users to transact cryptocurrencies. Most stablecoins are pegged to the value of the US dollar, which means that a stablecoin should always be worth one dollar. But federal regulators have begun investigating whether stablecoins are backed by enough reserves to protect their investors. In recent weeks, the largest stablecoin, Tether, has been trading for a fraction of a penny less than the dollar. And a smaller one, Terra, completely collapsed.
  • ‘Fedcoins’ – This slang term originated in the crypto community and refers to the US government’s efforts to explore creating its own digital currency. In March, President Joe Biden signed an executive order which called on the government to put “urgency” on the research and development of a potential Central Bank Digital Currency. While not yet approved, this move is seen by some cryptocurrency enthusiasts as a threat to Bitcoin and other private blockchain assets.

Now, let’s move on to Inman’s conversation with Consortia.

Imman: in January at Inman Connect New YorkTeresa said that replacing middlemen, such as real estate agents, is one of the explicit goals of many blockchain enthusiasts. What role could Consortia play in keeping the agent at the center of a blockchain-assisted transaction?

Grobecker: This was my promise to the industry in 2018, to jump onto the national stage. I had no idea what I was getting myself into. I didn’t even know Inman and all these things existed. I knew about the publication, but the events, I didn’t know anything about this space. In the [Real Estate Standards Organization] stage in 2018, I said the promise was to keep the real estate agent at the center of this. So when we mint a non-fungible token of ownership, there has to be a practitioner who is the admin of whoever gets into the system, to link that ownership to the right person. The reason is that it is a conversation based on a relationship.

Cottrell: If you look at history, this was the first time with the Internet, where people thought that what Expedia did with travel agents was going to happen with real estate agents. And it didn’t, because people realized that clients want representation. So just introducing blockchain doesn’t remove the need for relationships, as Teresa just described. In the Web3 world, or decentralized world, they like to clean everything up, and that’s not practical. The expectation is that the efficiency of the blockchain will be able to take advantage of what Consortia offers. And if anything, we can remove transaction costs and make it much more efficient, but it doesn’t break that link. [between parties]. We can provide the private blockchain to all parties, and still have the public parts that are needed, and do it in a way that sees huge adoption in the real estate ecosystem.

One of the uses of the blockchain you have mentioned is to host a public database of housing listings and transactions. Are you describing an MLS competitor? And how far are we from seeing it happen?

Grobecker: There is no intention to disrupt the world of MLS. I think even when we first launched, there was a lot of fear. I have been asked this question for the last four years since I joined organized real estate. People see a platform where data is shared and the closest thing we can compare it to is MLS. The MLS, I say, is the backbone of the financial markets, and on a global scale. The reason US real estate is so stable is because of the way data is collected and stored on the MLS. Consortia has no interest in replicating that system. I’ve had people from the MLS world come to me and say, “Teresa, ask us how we would rebuild this on the blockchain.” It’s inefficient, at best. The other side is the sales and service side of the MLS. We have no intention of going there, so with that being said, Consortia complements the kind of data that is available in the real estate market and puts it all in one place.

Fejeran: As she was describing, Consortia is not meant to take over MLS, or real estate agents, or any part of the industry. The consortiums are to help be a more efficient, effective and consistent data repository of correct information so that all parties involved in the information know that it is true, verified, appropriate, proprietary what is appropriate, versus the public what is appropriate.

How much of Consortia’s business is a data warehouse versus an educational resource for brokers and others about the blockchain?

Grobecker: Blockchain as a technology allows so many doors to open and all of a sudden we as professionals are now faced with things that have never been on our radar before. So now we need to understand the convergence of SEC laws. We have to know the financial crimes of the United States Department of the Treasury, your department. That touches on anti-money laundering laws and know-your-customer rules. Now we have to say, here is someone’s crypto wallet. Oh, by the way, where does this money come from? Does it come from the dark web and the Silk Road? Or are they legitimate funds from someone’s legitimate wallet? We have to know, are we selling real estate now or are we selling an SEC regulated security? For me as a practitioner, especially as a runner, it is to understand the convergence of all these laws. I just want to make sure all my friends don’t wear orange jumpsuits. It’s really important for everyone to say, “Okay, these are the laws: This is how I stay in my lane and stay out of trouble.”

In recent months, the prices of most crypto assets, including NFTs, have fallen sharply. Do you think this will affect the timeline for further adoption of blockchain technology in real estate? Do you think it slows him down?

Grobecker: Forward, actually, and at a fast pace. And the idea here is that cryptocurrencies are simply a testing ground for a Fedcoin to be implemented. And when this project started, that was very much like a conspiracy theory. But the government has since announced that they are working on Fedcoin. Also, in the last two months, the SEC said that they were going to regulate stablecoins. They were going to investigate them, weren’t they? And immediately after, the stablecoins start to fail. From there, everything begins to unwind, as far as the validity of cryptocurrencies. And this is really a beautiful thing. The SEC and the federal government really cracking down is good for the consumer. That they rinse this is good for the consumer. It is also strengthening what will become Fedcoin and what will become a winner or two in the real stablecoin space. So I think everything moves faster from here in a legitimate and legal way.

Cottrell: I think there is a lot of confusion when people want to equate blockchain with crypto. And it is becoming clear that blockchain is the infrastructure. It is the ledger, so to speak; it is immutable. That is going to be the infrastructure that advances. We may lose 90 percent of crypto projects. I should remind you of 1999. During 1999 and 2001, a lot of things went [in the internet infrastructure]. I hope the same thing happens with cryptocurrencies.

Inman Connect Las Vegas kicks off in just over a month here. Can you give our readers a sneak peek of what you plan to discuss on stage?

Grobecker: As a follow up to the previous question, probably something that is important to say is the second the Fedcoin or stablecoin winners are revealed, 100 percent, all of our transactions are on the blockchain. So it doesn’t matter if you like blockchain, if you hate it, that’s really irrelevant. It’s a question of, are you ready for it? We, as practitioners, must be prepared. We need to adapt. We need to educate ourselves and then be there to serve our customers.

Cottrell: There is a lack of understanding of the regulatory framework, especially when it comes to real estate. There’s a lot of frothy talk about subdivision, NFT home sales, and whatnot. So we’re also going to touch on that so that people understand where we expect the market to go.

Fejeran: the interesting thing is that [a number of influential agents I work with] they are hungry for this. They don’t understand it, but they are hungry for it. And they’re looking forward to a new app that Consortia is going to do, to take a look at the metaverse, since you mentioned it, something that we’re going to integrate. We’re not going to get into that yet. But keep your ears open. That comes in the future.

Email Daniel Houston

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