At the request of registered organizations, the Brazilian government of São Paulo has banned the registration of documents linking tokens to real estate properties. As a result of this measure, markets operating in the gray zone will be suspended and must now await appropriate regulation.
Registration of real estate tokenization project halted by São Paulo government
The city of São Paulo in Brazil must stop registering tokenized real estate properties.
According to Valor Econômico, the Comptroller General of the City of São Paulo, Francisco Eduardo Loeiro, has decided to ban the registration of any real estate related to blockchain tokens, and this decision is seen as a victory for notaries against companies involved in the tokenization of real estate.
The decision follows the earlier withdrawal of a resolution issued by the Federal Council of Real Estate Brokers (Cofeci) that sought to regulate the industry.
Flaviano Garhardo, executive director of the state-run operating company of the Electronic Real Estate Registration System (ONR), agreed with the results, saying it clarifies the economic rights of real estate token holders and separates token ownership from real ownership.
“A token can represent an investment contract or a financial instrument, but it cannot make people believe that it is actual ownership of real estate,” he said.
For Garhard, introducing a parallel token system could undermine the security of a 180-year-old legal system based on traditional real estate registries.
He evaluated:
“Today’s real estate register provides stability to the entire real estate production chain, from civil construction to real estate financing. Everything is built on the security of the real estate register.”
ONR has asked the National Council of Justice (CNJ) to issue regulations regarding real estate tokens, but this has not happened. Insiders see the inspector general’s move as a setback because it halts an industry already operating in a gray area without offering solutions to the problem.
The market capitalization of Brazil’s residential real estate sector has reached more than $106 billion and is expected to grow to nearly $139 billion by 2031, according to Mordor Intelligence.
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FAQ
What decisions has São Paulo made recently regarding tokenized real estate?
São Paulo has stopped registering real estate linked to blockchain tokens, and real estate tokenization has taken a setback.Who banned tokenized real estate registries?
The decision was made by Francisco Eduardo Loeiro, the city inspector general of São Paulo.What concerns have experts expressed about real estate tokens?
Experts argue that tokens cannot convey true ownership and could undermine Brazil’s traditional real estate registration system.What is the current state of the real estate sector in Brazil?
Brazil’s residential real estate market is valued at more than $106 billion and is projected to reach nearly $139 billion by 2031.