Today, August 15, 2017, California-based blockchain company Propy announced it will partner with the government of Ukraine to allow foreign buyers who are interested in real estate to invest by means of blockchain technology.
As stated in the announcement, housing prices in Ukraine have declined by approximately 70 percent from a 2008 peak. Now in a stage of recovery, Ukraine seeks to boost the economy by attracting fresh capital. The collaboration between Propy and the State Agency for eGovernance of Ukraine will allow for real estate transactions to be settled online, making use of executable distributed code contracts (EDCCs), also known as smart contracts. Widely accessible, this means of buying real estate will open the market to foreign investors.
EDDCs allow for the entities involved in a real estate transaction, including brokers, buyers, sellers, title agents, and notaries, to interact by signing off on specifically tailored agreements. The regulations based on regional requirements can be programmed into the EDCC and the counterparties can agree to terms within the accepted legal framework of their professional environment.
Head of the State Agency for eGovernance of Ukraine, Oleksandr Ryzhenko, detailed the goals of his organization. “Our ambition is for Ukraine to be one of the world’s foremost nations in establishing a comprehensive blockchain ecosystem, and the real estate sector forms an important part of our overall blockchain strategy," he said. “Adopting the blockchain’s transformational technology will benefit all counterparties in real estate transactions through fostering greater transparency, efficiencies, security, and compliance.”
Regulators in Ukraine have not turned a blind eye to blockchain technology; as recently as August 11, 2017, the National Bank of Ukraine pledged to hash out terms for the regulation of cryptocurrencies, as reported by ETHNews. The move by the government to embrace Ethereum as a means of economic boost may shed light on what type of regulation the bank settles on.
Natalia Karayaneva, CEO of Propy, said Ukraine's recent work with Bitfury to build a blockchain-based internal government database was a great first step. "Ukraine’s government is strongly interested in building upon this progress by leveraging Propy’s technology to facilitate online real estate transactions to attract foreign property investors.”
As per its whitepaper, Propy uses the Ethereum blockchain to coordinate between the buyer and seller of a property while also interacting with lenders and land or title registries. To date, Propy has developed three contracts, the functions of which are listed below.
1) Title Contract: Stores and updates property metadata to the blockchain, and interacts with the native ERC20 token that Propy intends to mint to create and update property records.
2) Deed Contract: Manages information for Escrow services, keeps track of and sends invitations to transactions participants, as well as interacts with the token to update deed records.
2) Identity Contract: Managed records which store identity information for all users system-wide and contains know-your-customer features.
Currently in development are an Agreements Contract, an Electronic Signatures Contract, a Payments Contract, and Escrow Contracts. Once ready for market, the EDCCs that Propy creates will bring together all the entities necessary to complete a real estate sale and transfer of title, eliminating costly and time-consuming escrow processes.
"While this clearly benefits the Ukrainian real estate market, it also allows foreign investors to purchase enticing properties in a very low price range, all with the benefits and security that Propy provides,” said Karayaneva.