As part of the Italy Digital Pulse initiative, Alessandro Tanno, Practice co-ordinator of the Fintech and Digital Transformation Group in Milan, interviews Lorenzo Rigatti, Founder and CEO of BlockInvest.
Q1: Lorenzo, what is BlockInvest, and how you came up with this idea?
A1: Over the past few years, I have worked in applying blockchain to several processes
and industries, seeing the potential of this particular distributed ledger. The possibility to
exchange value and trust with the internet of value, and the expertise in the NPE-Real
Estate market of my partners/investors gave birth to an idea, that two years later become
the BlockInvest solution.
So, BlockInvest is a blockchain-based management platform, thought for financial
institutions (Banks and Asset management companies), designed to improve the selling
process of alternative assets.
Thanks to this solution, it is possible to digitalize the sale process of illiquid assets by
improving data quality and creating the financial instrument of the underlying asset
(security token), taking advantage of the blockchain technology to broaden the investor
base at a global level, in a compliant environment with an unparalleled security level.
Q2: Why do we need blockchain for this market, and how does BlockInvest
differ from other solutions?
A2: The BlockInvest solution was born in a period of radical change from a
technological, cultural and economic perspective. We realized that a totally different approach was necessary to respond to present and future market needs.
Alternative Financings (through the issuance of security tokens running on the
blockchain) has the potential to be more flexible and versatile than classical Notes.
Unlike dematerialized Notes, the Alternative Financing will not require the involvement of
any indirect holding system (such as Monte Titoli in Italy, Euroclear or Clearstream), with
all the associated savings in terms of time, costs and operational complexities. Until now,
Alternative Financings were less tradable instruments than Notes in terms of trading
facilities and a reference market, syndication of Alternative Financings can now benefit
from the possibilities offered by such new technologies.
In particular, thanks to the above-mentioned possibility of not being subject to a
centralized authority, we can take advantage of the blockchain standard to expand the
investor base globally in a more decentralized and secure way.
Our solution, although scalable in the future on different asset classes, is created in
co-design with leading players in the Real Estate and NPL sectors with whom we are
already working. Today there are some excellent “showcases” that are aimed at the
current market players. Even if they represent a significant innovation in the sector, they
do not directly manage financial transactions, and above all, they are not intended
to expand the market to a new type of investor. Our focus, on the other hand, is just
that! Furthermore, the certification/notarization feature of the blockchain (which other
platforms in the sector are experimenting), for BlockInvest is only functional to our true
goal, that is to favor the creation of new innovative financial instruments, a prelude to
the creation of a new market.
To be more specific, our solution is an end-to-end management platform allowing Banks
and Funds managers to load on BlockInvest all the documents and relevant data of the
underlying, notarise on the blockchain the whole dataset, and engineering the financial
instruments dedicated to this new target market. Furthermore, directly on the platform, is
possible to manage the Investors invitation process and the KYC-AML procedure. It will
be possible only for accredited investors to send such securities (both on the primary
and secondary market). The innovative aspect is that a token could represent a very
specific part of a portfolio (ie in a Portfolio Secured the security token representing the
Hotel development in Lombardy region). With this approach, the Investor could not only
be a market operator, but also a private accredited investor who can easily diversify his
investment strategy.
Q3: What are the future prospects for this new market?
A3: Is not more a matter of “if”, is just a matter of “when” the real asset classes will
land and be transferred through the public blockchains, and there is multiple supporting
evidence in this respect:
> Growing attention and opening by the main Regulators.
> The DeFi phenomena, is showing that the new decentralize finance models are
disruptive! Companies with 30 employees are managing billions thanks to the
performance of these sophisticated smart contracts. What is not yet solid, is the
underlying asset (actually, just cryptocurrencies are involved).
> According to a survey by the World Economic Forum the amount of real assets being
digitized on the blockchain will be up to 10% of global GDP in 2027. We are talking
about Equity, Bonds, Real Estates, Collectibles, and so forth.
> CBDC, so the crypto Euro legally issued and recognized, is not more just an idea.
The EIB with Bank of France and three primary financial institutions (Goldman
Sachs, Santander, Société Générale) are experimenting the issuance on Ethereum
blockchain of 100 mil Euro bond. Other similar experiments are already in progress. A
Recognized CBDC could boost dramatically the tokenised security adoption.
As BlockInvest, we are already working in several P.O.C. with Banks and Asset
Management Companies to demonstrate the possibility and the potential performance of
adopting this standard.
Article originally posted on: https://lpscdn.linklaters.com/-/media/files/document-store/pdf/milan/2021/july/gc23191_milan_digital_pulse_interview_july_2021_2pp_fs_final_screen.ashx?rev=fcca41e8-101a-4161-99fa-f4b37cb2c8b6&extension=pdf&hash=EBAAE505A973BAE622573E4F03E8D182
