You may not have noticed but on July 2, 2017, Delaware Senate Bill 69 was signed into law by Gov. John. C. Carney Jr.
In general terms, it was considered a major break through as a defining moment for blockchain specifically in the US.
It will allow the creation and maintenance of corporate records using blockchain. The definition would further capture a corporation’s stock ledger, an accounting record used to keep track of when stocks were sold and to whom.
The emphasis in bold is mine. Please reread and let it soak in.
Directly taken from Delaware Senate Bill 69:
Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time.
We are all in commercial real estate.
What’s the first thing that comes to your mind when you read the words, “used to keep track of when stocks were sold and to whom.”
I thought of REITS.
Now any and all REIT’s around the world will have the option of issuing, executing and settling shares via a blockchain. It is also likely to create other related activities on blockchains tied to custodianship, trading, shareholder communication and redemption.
What else is going to happen?
How about the “acts” of custodianship, trading, shareholder communication and redemption?
What if you take away the basic components of what we all know is the structure of a REIT?
What if we take away the concept of a REIT and just apply it to commercial real estate in general.
The bill did mention trading and trading by definition is: trading securities are stocks or bonds that management plans to purchase and sell in order to make money in the short term.
Blockchain will allow both investors and issuers to interact directly with each other, eliminating the need for third-party intermediaries like brokers, custodians, and clearinghouses, which will reduce transaction costs. The settlement can occur within a few short moments, as opposed to days, with funds being released and fees being reduced.
Legal ownership and control would be given back to investors and companies, and the system would allow for proxy voting to become more transparent and accurate. Dividends and stock splits can be easily facilitated, virtually mitigating costs and errors. Further, concerns around the single-point-of-failure risk with the prevailing system would be eliminated.
Did you miss the eliminating the need for third-party intermediaries like brokers, custodians, and clearinghouses part?
Sorry about that.
I did write somewhere that the entire transaction itself is the new battleground for all of real estate.
It’s quite obvious that most if not all the pieces needed to accomplish just that is indeed in place.
Why would anyone not want this?
The broker part goes without saying.
How about the fact that this type of market transparency might be an issue for some investors who would rather their financial positions not be visible to anyone. If you are hiding it, you are hiding it why?
I know you are smart.
You will figure this out.
A Big Thank You To The State Of Delaware for seeing the future of business and acting like the world is indeed populated with at least a few smart and insightful people.
And for the rest of us, Welcome To The Jungle.
Of course, I just had to do it.