How Real Estate Tokenization Differs From Initial Coin Offerings

Tokenization has quickly become one of the best use cases for Blockchain technology. Real estate tokenization, in particular, has been disrupting the sector recently.

Worldmetrics statistics show that over $10.3 billion was raised through real estate tokenization globally in 2021. In addition, the global real estate tokenization market is projected to reach $4.22 billion by 2027.

Real Estate Tokenization On The Rise

While real estate tokenization is still a relatively new concept, a number of use cases are starting to emerge.

For example, it was recently announced that the oldest church in Fort Collins, Colorado —known as “Old Stone Church “—will be tokenized . This is being done in an effort to raise $2.5 million to secure ownership. The Colorado House of Prayer, a network of affiliated church groups, aims to purchase the church by issuing tokens that represent ownership.

Natalia Karayaneva, CEO and Founder of real estate tokenization platform Propy, further told Crypto news that in the past six months, Propy had minted over 240,000 home addresses. She noted that more than 100,000 American homeowners have minted addresses on the Propy blockchain for tokenization use cases.

“These homeowners are circumventing the issues presented by the traditional market by looking for instant digital experiences with low fees,” Karayaneva said. “Imagine what this looks like on a global scale – democratized access to not just residential properties but commercial addresses too.”

Benefits of Real Estate Tokenization

Karayaneva added that real estate tokenization is on the rise due to the benefits associated with the concept. For instance, tokenization allows for fractional ownership of a property .

“A significant benefit of fractional ownership is the lower financial commitment required, making it accessible to a broader range of investors,” she said.

Graeme Moore, Head of Tokenization at Polymesh Association—the organization behind the Polymesh blockchain—told Cryptonews that this is a main reason why the Colorado House of Prayer is leveraging tokenization.

“The building itself, which is a church, is being tokenized,” Moore said. “Pastor Blake Bush, who is the House of Prayer lead, was renting space in this church. But he now wants to own it with a group of investors, so they can have a bigger say in the building’s development.”

Both church practitioners and interested investors will likely participate in the $2.5 million raise by purchasing real estate tokens known as “Stone Coins.” REtokens created these tokens, which run on the Polymesh blockchain.

Tokenization Use Case or ICO?

According to Karayaneva, the idea of tokenizing a historic church makes sense.

“This works for a specific circumstance, such as the need to fractionalize ownership and raise capital to purchase,” she said.

Karayaneva further pointed out that tokenizing a church or similar properties where crowds congregate can unlock other opportunities, such as increased donations and greater community engagement.

On the other hand, tokenizing Old Stone Church also sounds similar to an initial coin offering (ICO) . ICOs gained traction during the 2017 crypto bull run. A number of crypto companies launched ICOs during that time to raise capital, yet most of these were deemed scams.

However, Moore explained that tokenizing a piece of real estate to raise funds differs from that of an ICO.

“These are two very different concepts,” Moore said. “With an ICO, investors are buying tokens that do not represent ownership over anything. Real estate tokenization allows investors to buy a legal claim to ownership in a piece of real estate.”

Tyler Vinson, CEO of REtokens, further told Cryptonews that Stone Coins are security tokens that are backed by a real property asset.

“The ‘Stone Tokens’ comply with US Securities and Exchange Commission (SEC) registration exemption Regulation D 506C,” said Vinson. “Whoever owns these tokens owns an actual piece of the real estate property called Old Stone Church.”

Vinson added that traditionally, ICOs were offerings that did not normally follow the SEC compliance regulations for raising money.

“Nor were they typically backed by a Real World Asset (RWA),” he said. “ICOs typically positioned themselves as a utility token or native coin, whereas Stone tokens are asset-backed security tokens that comply with SEC regulations.”

Vinson further remarked that interested investors can buy Stone Tokens using fiat currency. While crypto cannot be accepted yet, Vinson shared that REtokens will have the licensing to accept USDC stablecoins and Bitcoin (BTC) in March 2025.

Tokenized Real Estate Will Continue To Gain Traction

As long as tokenized real estate is compliant, industry experts believe that use cases will continue to emerge.

“Many real estate tokenization projects are starting to come on-chain,” Vinson noted. He added that REtokens could mint tokens for any kind of real estate worldwide, as long as there are recognized property ownership and property rights in the jurisdiction.

“The most popular tokenized properties have been investment real estate projects, but Old Stone Church has set a precedent for tokenizing unique properties that people will want to own a part of for reasons that extend beyond just making an investment profit,” he added.

Bart de Bruijn, Founder of real estate tokenization platform EstateX, further told Cryptonews that as the technology matures and regulatory clarity improves, more people will leverage tokenization to gain access to investment opportunities.

“Tokenization is proving its utility in the financial and asset sectors, showing that it can fundamentally change how we invest and manage assets,” de Brujin said.

He added that this concept is gaining recognition as major players like BlackRock have further validated the tokenization mode l.

“In essence, the surge we’re seeing now is driven by a combination of technological maturity, increasing institutional interest, and the undeniable advantages that tokenization offers in democratizing access to lucrative investment opportunities,” de Brujin said.

Vinson further remarked that while most of these projects are only available to accredited investors, REtokens is launching a Digital ATS (Alternative Trading System) in March 2025 that functions similarly to an exchange.

“This will allow for secondary trading of real estate security tokens,” he said. “These digital real estate assets will be available for non-accredited retail investors to purchase. This will greatly lower the entry barrier to invest in real estate and provide liquidity for a traditionally illiquid asset.”