The Dawn of Digital Mortgages
In a groundbreaking move that could change the landscape of home buying in Russia, a subsidiary of Raiffeisen Bank International has issued what it claims to be the first electronic mortgage on the local blockchain platform, Masterchain. This innovative mortgage was reported by the business newspaper Kommersant on September 24.
How It Works: The Mechanics of the E-Mortgage
The electronic mortgage contains crucial data regarding the involved parties, the credit loan specifics, and details about the property purchased. This document is secured on a decentralized depositary system (DDS), a brainchild of major Russian banks partnered with the Central Bank of Russia, which has been under development since 2016.
Decentralized Depositary System (DDS)
The DDS is an exciting leap forward in securing sensitive transactions. With this system, once the document is verified using an electronic signature, it is sent to Rosreestr— the Russian agency responsible for real estate records. There, the document undergoes a thorough check before a “mortgage token” is filed away securely at Raiffeisen Bank.
A Step Forward for Real Estate Transactions
Though this is a significant achievement for Raiffeisen, there are still challenges ahead. As it stands, Rosreestr has yet to connect its operations to the Masterchain platform. Ongoing negotiations aim to integrate the state regulator, which could greatly streamline the process of mortgage repayment and close deals without the headache of third-party involvement.
Future Prospects
As for Raiffeisen, their vision doesn’t stop here. They are eyeing the next phase that involves using blockchain technology for not just mortgages but also for buying and selling contracts related to real estate. Even though the current limitations from Rosreestr pose a challenge, the potential is high.
In The Company of Others
Kommersant also unveiled that two unnamed major Russian banks are joining the DDS initiative and have their sights set on rolling out e-mortgages by the end of 2018. With interest in blockchain technology booming among Russian banks, expect more news to surface in the near future.
A Global Perspective
This trend isn’t just limited to Russia. Other countries are exploring similar solutions for real estate transactions. For instance, the Netherlands has already begun testing blockchain applications for their land registry, with a full operation integration anticipated within the next few years.
Legal Regulation and Interest in Blockchain
Despite the challenges, the appetite for blockchain technology among major Russian banks is soaring. The Central Bank of Russia is also riding the blockchain wave, having conducted a successful Initial Coin Offering (ICO) test, which is a part of its push towards developing comprehensive crypto regulation.
