The tokenization of real-world assets has been tipped as a major use case of blockchain">blockchain technology that could drive Web3 adoption. In episode 35 of Cointelegraph’s Hashing It Out podcast, host Elisha Owusu Akyaw interviews Sanjay Raghavan, vice president of Web3 Initiatives at Roofstock onChain, about tokenized real estate on the blockchain and how digital real estate investing interacts with the nonfungible tokens market and the decentralized finance landscape. Raghavan also talks about fractional nonfungible tokens (NFTs), regulations and the risks related to Web3 real estate platforms.

Raghavan explains how real estate is sold on the blockchain using NFTs. Companies that sell real estate on-chain must first purchase the property and create a limited liability company (LLC). An NFT is then created, which is associated with the ownership of the LLC. When users buy the NFT, they buy the LLC, which means they have purchased the property.

Raghavan tells Hashing It Out that regulations for tokenizing real-world assets can be complex. In the United States, for instance, various states have rules on the sale of assets, meaning that com navigate separate compliance requirements across 50 jurisdictions.

Beyond bringing people from the traditional real estate market to Web3, Raghavan believes that crypto natives may see real estate tokenization as a diversification tool. He explains that most investment alternatives in the industry may be highly correlated to the Bitcoin ( BTC ) price, and having another stable and less correlated asset could be a reason for exposure to real estate NFTs.

Raghavan also talks about the fractionalization of assets, including NFTs, which may require running a securities program that makes it unattractive for companies working in the United States. On the other hand, non-U.S. citizens may be able to access fractional NFTs in the future if firms outside the jurisdiction buy properties and sell the NFTs in other markets.

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This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.