BlockInvest Innovates Italian NPL Market With Tokenization

BlockInvest plans to tokenize NPLs in two projects starting with a proof-of-concept and later focusing on default Italian mortgages.

BlockInvest, an Italian startup, is going to tokenize non-performing loans (NPLs) in two different projects. The first project will be a proof-of-concept, while the second project will tokenize Italian mortgages that are in default.

It reached its highest point of 360 billion euros in December 2015, which was equivalent to $391 billion at the time, but the Italian non-performing loan market has subsequently decreased to a value in the tens of billions of euros.

BlockInvest plans to collaborate with securitization consultancy 130, located in Milan. As a preliminary step toward its primary objective, the company is now conducting a proof-of-concept to issue native digital asset-based securities notes directly on the blockchain.

Davis & Morgan, a credit management company based in Milan, will collaborate with the company to tokenize distressed real estate credits it has purchased.

This will allow for the tokenization of financing agreements and other associated instruments. BlockInvest has stated that tokenization will present the opportunity for fractional ownership, increased liquidity, and a market that is both more accessible and better governed.

“The goal of bringing these assets on-chain is to minimize the impact of non-performing exposures on the institution’s financial stability and to restore the health of the loan portfolio.”

BlockInvest utilizes Polygon technology, which is institutionally supported by the Credit Agricole Italia bank. A statement released has expressed concern about the Italian non-performing loan market for several years.

In a report published on January 18, the Financial Stability Board (FSB) stated that the legislation adopted in 2016 has reduced the number of non-performing loans (NPLs), but many complex loans that are “not likely to pay” are still outstanding.

The Financial Stability Board appealed to the Italian government to continue to encourage the market, to improve the judicial system to make the settlement of non-performing loans easier, and to devote more human resources to the issue.

Italy has one of the most advanced regulatory systems for cryptocurrencies in Europe.