Fubon Bank (Hong Kong) has announced its plan to test a real estate tokenization program in collaboration with the financial technology company Ripple. The initiative is set to be carried out in the third quarter and aims to leverage the benefits of digital currencies and blockchain technology to streamline property transactions and lending processes.
As part of the pilot project, Fubon Bank will utilize the Ripple Central Bank Digital Currency (CBDC) platform, which will allow the bank to tokenize properties, enabling them to issue loans using digital Hong Kong dollars. The implementation of blockchain technology will enhance security, transparency, and efficiency in property transactions, while also facilitating the issuance of loans in digital Hong Kong dollars to accelerate the overall process.
The testing phase will initially focus on existing customers who are potential candidates for additional mortgage loans. Through the partnership with Ripple, the bank will be able to tokenize the collateral and provide eHKD loans to customers using a 1:1 exchange rate between Hong Kong dollars and the test digital currency. To access their loan information and relevant data, customers will have the convenience of using Fubon’s dedicated eHKD electronic wallet, which will display details such as loan-to-value ratios, stress tests, and property values in real-time.
Fubon Bank’s Executive Vice President and Chief Strategy Officer, Eric Hsu, explained that the use of Ripple’s CBDC platform, which incorporates digital Hong Kong dollars and tokenized real estate, aligns with the technology used in the XRP Ledger (XRPL). This technology is designed to operate on a private and secure ledger system. Ripple has been actively involved in various CBDC projects globally and is engaging with dozens of central banks, including initiatives to trial digital currencies for retail, cross-border, and wholesale payments in Bhutan, as well as working with the Palauan government on a US dollar-backed stablecoin.
Hsu emphasized that Hong Kong’s payment ecosystem, which already includes popular methods like FPS (Faster Payment System) and Octopus cards, is mature enough for the adoption of digital Hong Kong dollars. To drive the adoption of eHKD, starting with loan issuance was a strategic choice, as customers who receive digital Hong Kong dollar loans can subsequently use them for property purchases, investments, and other transactions, thus promoting the use of the digital currency.
While the current focus is on mortgage loans, Fubon Bank is exploring potential collaborations with property developers to expand the use cases for digital Hong Kong dollars. For example, young homebuyers could involve their parents, who might leverage their existing properties to acquire digital Hong Kong dollars to buy real estate from developers. The success of such applications will depend on the growth of the digital Hong Kong dollar ecosystem, and Fubon Bank is considering incentives such as “referral bonuses” to encourage customers to embrace the digital currency.
Looking ahead, Eric Hsu envisions a future where entire properties, including land deeds managed by the Land Registry, can be tokenized. Although the pilot program does not currently include new mortgages, it lays the groundwork for potential future applications, subject to successful implementation and customer acceptance. Furthermore, the bank is also exploring possibilities for the tokenization of real estate equity, which could lead to the fractionalization of property ownership, unlocking new investment opportunities.
Source: https://azcoinnews.com/fubon-bank-partners-with-ripple-for-real-estate-tokenization-pilot-in-hong-kong.html
