Elevated Returns Tokenizes $1B of Real Estate in Southeast Asia

About the Customer

Elevated Returns (ER) is a financial group leading the push to digitize traditional assets, and a subsidiary of parent company ER Global, which focuses on capital partner replacements, equity monetization, and recapitalizations for class A properties located throughout the U.S, South East Asia, and Europe. Elevated Returns and ER Global established themselves in the blockchain industry as one of the first companies to successfully structure, implement, and execute the tokenization of a trophy asset, the St. Regis Resort Aspen, Colorado, a project which raised $18 million USD through a security token offering (STO) in 2018.

Business Challenge

Tokenized real estate has always been a compelling use-case for blockchain technology, with the end-goal of unlocking additional liquidity from the $217 trillion global real estate sector through fractionalized ownership. Elevated Returns is at the forefront of this effort, currently working towards tokenizing $1 billion worth of real estate in Southeast Asia secured on the Tezos blockchain and traded in a regulatory compliant secondary market using AlphaPoint’s institutional grade STO exchange technology.

Elevated Returns CEO Stephane De Baets spoke of the outset strategy, “To understand the challenges, you must understand the project choices that were made very early on, because the major choices were the greatest challenges,” he continued, “We decided to use three pieces of technology that had never worked together, and try to make them work together. The first was using the Tezos blockchain to tokenize the real estate in what was largely an Ethereum dominant dev environment. The second was, at the time, to use Securitize as an open management platform for digital security issuance . The third was to use AlphaPoint’s exchange technology to trade the asset backed shares, but AlphaPoint did not have any security token specific exchanges fully-live back in 2018, so we were truly innovating together.”

One lesson was clear to the team early on in tokenizing real estate, when forging new ground in novel business territory there is one partner most important to accommodate: the regulators. De Baets commented on the regulatory reality, “What I’ve found to be true in finance projects I’ve been involved with in the past, is if you go to a consortium of vendors that are working together, they will gang-up and say, ‘Look this is my market and the product/market fit is clearly there, now go and tell the regulator that they should look at it the same way we see it.’”, which De Baets refutes as misguided, “Truthfully, unless you work hand-in-hand with the regulators, in this case the Securities Exchange Commission of Thailand, and cooperatively develop a balanced business solution through mutual give-and take, you will never have your product make it to market.”

Solution

Elevated Returns’ business model is a three pronged approach, using Thailand as a testing ground to establish a replicable roadmap for tokenizing real estate in other national jurisdictions. The first prong identifies a country with a crypto friendly regulatory environment to operate in, which for this initial use-case Thailand’s economic policies exemplified all of the attributes to attract legitimate and productive foreign investment. The second prong is two-fold, requiring selection of a primary issuance platform to mint a digital token and a secondary exchange to trade the token. The third is dependent on the nation of operation, which could mandate acquisition of an asset management license.

In Thailand, Elevated Returns is in a unique position globally in that they successfully checked the three licensing boxes, having worked with SEC Thailand and the Thailand Ministry of Finance to secure a primary ICO portal license, a digital asset management license, and a secondary market license. With these certifications, they’re legally green-lighted to issue real estate backed security tokens, conduct the trading of these security tokens, and manage funds raised from the public to trade the security tokens on behalf of investors.

Once this three-pronged infrastructure is firmly installed in Thailand and stress-tested through high volume use, Elevated Returns intends on transposing a similar model globally in other viable markets like Vietnam, Singapore, England and France. Ultimately, Elevated Returns wants to be seen as the ‘Amazon of Digital Financial Products’, “What we want to do is be a one-single point of contact access platform, so in the future you can choose your various digital investment, either classified by country, by issuer, etc. Once you go into that global platform, you click Buy Token, you effectively go and execute into the local environment, which is a regulated market. The grand idea is to feed all activity into an aggregation platform where you have a single login to trade into multiple markets,” concluded De Baets.