- Fraction is a subsidiary of a Fintech company that facilitates fractionalized ownership of real estate and physical assets.
- Fractionalized ownership implies that there are multiple partial owners of the real estate such that no co-owner can harm the ownership rights of each other.
- The Thailand Securities and Exchange Commission has issued a license to offer Ethereum-based token backed tangible assets.
What did Fraction announce?
Fraction, a subsidiary of the Hong Kong based Fintech firm, Fraction Group, announced that it had received a license from the Securities and Exchange Commission of Thailand allowing it to list and trade Ethereum-based tokens for partial or fractionalized ownership of real estate projects and other assets.
The Thailand SEC had granted the license back in 2018 allowing the firm to proceed with its Initial Coin Offering (ICO). However, due to portal delays and the pandemic in early 2020, the company could not launch the fractionalized real estate project. An Initial Coin Offering refers to the invitation to the general public and investors to subscribe and buy the newly listed coins or digital assets of a company.
The license issued by the Thailand SEC outlined Fraction’s project of real estate digitization and fractionalized ownership through coin offerings.
As the portal is now ready, the company is expected to initiate the first coin offering for public subscription in the first quarter of the Financial-year 2022. The company will offer digitized tokens in partnership with the local Real-estate developers for properties and assets. The first phase of the Initial Coin Offering will be valued at over $460 million according to estimations.
What are the benefits of the project?
The interesting part of the project is that the investors can be co-owners of a particular real-estate project by subscribing to the coin offering. One can buy even 1% of a real-estate project and be a co-owner of the same. Instead of making a partial down payment or a full upfront payment for acquiring the house, investors can become co-owners of the house by putting up as low as $150 through Fraction’s service
Most people in today’s age require home loans or mortgages to acquire their homes. These actions put them in heavy debts and recurring interest payment obligations. Fraction’s project of co-owning Real estate with a significantly lower amount evades the requirement for a home loan with high interest rates.
Fraction’s co-founder acknowledged the company’s effort in building up such a platform. He said that Fraction has built up the portal and is ready to initiate the Initial Coin Offering while other firms have barely commenced a similar project.
Moreover, in addition to owning real estate for a lower cost, the investors will also be owners of digitized tokens as they will subscribe to the IFO. The evolution of the real-estate market is inevitable if this project is widely adopted. The real estate market surely needs some support as recently the second largest real estate developer in the world, Evergrande is rumored to default on its dues.