Why direct tokenization stalled

Tokenizing a single building directly is a legal challenge. This is why the real estate tokenization market stalled for so long: large capital avoids direct, unregulated transactions involving physical assets. The solution to this problem turned out to be pragmatic: combine blockchain with a traditional structure. Institutional players have moved from tokenizing "bricks"—instead, they tokenize shares of a traditional, strictly regulated investment fund.

The Goldman Sachs approach

This exact approach was recently implemented by a consortium of financial firms led by the investment bank Goldman Sachs. They launched a new real estate fund where digital shares (units) are issued on the bank's proprietary platform—GS DAP.

How the roles are divided

To ensure greater reliability, the participants divided roles according to the classic standards of traditional finance (TradFi): ▪️ LRC Group manages the real estate assets themselves. ▪️ Apex Group is responsible for the full legal administration of the fund and acts as the depositary. ▪️ Archax acts as a regulated custodian for digital securities and assists with their distribution. ▪️ Ownera technologically connects all participants into a unified network.

Why capital requires such a structure

Why does capital require such a complex structure? It may reduce operational costs and make the fund more transparent. Most importantly, investors gain the ability to easily and quickly buy or sell their shares on the secondary market, subject to market conditions and liquidity. Meanwhile, oversight by financial regulators is maintained. As Mathew McDermott, Head of Digital Assets at Goldman Sachs, noted: "Issuing blockchain fund shares ensures pinpoint investment precision and paves the way for the seamless transfer of ownership rights in the future." So, we can see how institutional participants adopt structured, regulated approaches to real estate tokenization, combining technology with traditional legal frameworks. This article is for informational purposes only and does not constitute investment advice.