Mortgage fintech firm, MQube, has tokenised £1.3bn worth of mortgage debt on the blockchain, becoming the first fintech in Europe to do so.
The firm explained the tokenisation of assets involves converting tangible or intangible assets, such as real estate, into digital tokens which are then recorded on a decentralised blockchain ledger or digital registry.
While stock, bonds, and real estate have been tokenised before, MQube’s announcement represents the first time mortgage debt has been brought on to the blockchain in Europe.
MQube CEO, Stuart Cheetham, said: “The benefits of tokenising mortgage debt right now, is that it allows mortgage lenders to achieve data integrity, transaction security and audit traceability.”
However, Cheetham cautioned that, once the necessary regulatory and operational framework is in place, there is still a “huge amount of work” that needs to be done as the opportunity for the mortgage lending industry is huge.
“The plethora of benefits include the ability to transfer assets from one lender to another, cutting out the legal process in a remortgage case and saving thousands of pounds per remortgage transaction,” he stated.
“Most importantly, however, the tokenisation of mortgage debt, paves the way for a brand-new mortgage securitisation market via the blockchain which involves the pooling of mortgage debt into a tradable and investable mortgage security.”
MQube said if more lenders begin to tokenise their assets on the blockchain, it could “open up a whole new world” for banks and building societies.
It explained the securitisation of mortgage debt frees up money for banks and non-bank lenders that was otherwise tied down.
The benefit for banks and building societies, according to the fintech, is increased societies is increased liquidity, reduced capital requirements, enhanced risk management, and the ability to write more loans and grow their business.
Meanwhile, for consumers, such tokenisation offers reduced cost of borrowing and more product choice.
tom.dunstan@ft.com
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