How the Matias Group Utilises the Blockchain
At the Matias Group we pride ourselves on being leaders and innovators in this ever expanding digital landscape. We have integrated blockchain technology and cryptocurrency lending into our daily operations and with access to funders from all over the world, we are able to ensure our clients receive the best solution every time. The most common types of blockchain transactions we deal with are 1) utilising cryptocurrency as security to release equity and 2) tokenisation of real-estate assets via NFT’s and smart contracts. At the time of writing this may sound like something from the future, but we are providing these solutions every week on some level.
Equity Release
Like using a house or property as security in a mortgage or car in chattel mortgage facility, a crypto loan is no different. Your crypto assets simply act as security for the loan rather than selling your crypto holding to liquidate into cash. The amount you can receive is simply calculated using a loan-to-value Ratio (LVR), based on the value of your crypto assets. Each funder has individual specifications regarding maximum LVR, interest rate, and coins that they will secure against. There are multiple different product types that range from Margin Calls, Principal & Interest and Collared products. This allows us to ensure a client has a unique, tailored solution to their individual circumstances.
The approval period is super-fast as most lenders usually only require the crypto asset to offer a conditional approval. Once the client’s account is set up with the lender and the crypto assets have been deposited, the client is wired Australian dollars (fiat currency) directly to their specified account (we have seen clients receive funds within a matter of minutes) and the client simply make the repayments that have been agreed upon and specified in their smart contract (digital contract).
Case Study
Joel, a cryptocurrency investor owns $1,000,000 worth of Bitcoin, which he purchased in early 2012. Joel was speaking with his mortgage broker about purchasing a $2,500,000 property for him to live in with his family. Joel discussed that he had very little cash savings for the deposit, but a large amount of Bitcoin. When asked by his mortgage broker if he would sell his Bitcoin, Joel replied that he would much prefer not to so he could hold his position.
The mortgage broker then contacted the Matias Group and explained the situation. The Matias Group was able to secure Joel $500,000 AUD, using his Bitcoin as security. Note there was not a sale of his crypto asset, therefore no Capital Gains T
ax (CGT) requirement. This then gave Joel enough cash to pay the deposit on his new property, leaving the broker simple access to an 80% LVR home loan with one of the major banks. Joel has agreed to take out his crypto loan on an 24 month, interest only facility at circa 9% APR. Joel anticipated (at time of lending) as an educated investor that the market value of Bitcoin will increase over the next two years, the product will allow the market increase to ‘pay down’ his balance. EG if his $1m secured Bitcoin value increases to $1.5m, this $0.5m increase is actually available to pay off his $0.5m AUD debt and he would in this case walk away still holding his $1m in Bitcoin assets and has realised ownership in property without any ‘cash savings’.
The broker was elated as our facility allowed them to complete a deal for a client that would not have been available otherwise. PLUS the broker was a registered partner of the MATIAS Group through the Matias Associate Program.
Tokenisation of Real Estate
Tokenization is a solution that divides the ownership of an asset (such as a house or a building) into digital tokens. These tokens act similar to “shares” and utilise similar technology to NFT’s. NFT’s are no longer what many people understand them to be. When asked “what is an NFT?”, most people will say “a digital piece of art showing an image of an ape”. That is not the case. When stripped back, NFT’s at their core are a digital piece of code/information which is owned unequivocally by the holder and stored on the blockchain. Now, by utilising the blockchain technology behind the NFT, we are able to tokenise properties for the transfer of real-estate ownership. Whether a client is looking to invest in, or liquidate an asset, tokenisation allows for a more streamlined process and reduces the barriers to entry/exit for clients.
Case Study
An investment property held in a Pty Ltd company name has a value of circa $10m. The owner needs capital to invest in another project and could not secure debt on the property through his current banking facilities. Instead, Matias Group can advise on the company being transferred into an NFT – all titles/building permits/landscaping/tenancy lease/rates are held in a smart contract so the asset can be fractionalised. 20 tokens/shares are listed (value of $0.5m each) which some can be sold to investors providing the liquidity in the asset that the client requires. Upon purchase, all relevant governing parties are notified, stamp duties and transfer fees are paid. The owner in this case can sell as much interest as he wants in his property/company.
Opportunity
The opportunities that this presents within the industry are limitless. Through integrating this ground-breaking technology, businesses are able to provide more solutions and thus more value to their clients.
At time of writing the most popular blockchain transaction is using cryptocurrency lending options. Matias Group are enabling mortgage brokers all over the country to complete their own mortgages for clients after the LVR on property has been decreased due to the debt raised on the client’s crypto assets. Note these are two separate transactions, and Matias Group have in many cases nothing to do with the main mortgage product, we are simply using the crypto lend as an enabler for you to write more business.
The macro opportunity here is to consider how many more transactions will be taking place, once ‘fractions’ of properties are available for sale. It will enable your clients to purchase ‘pieces’ of property in high growth suburbs, rather than purchasing in slower growth suburbs due to cost restraints. Building wealth for our networks in an accelerated fashion. Transactions in this area will become more seamless, and available to a new age of broker. You may think this is looking way into the future, but when you look back at the tech evolvements in your own business over the last couple of years, we do not think this is too far away from becoming more and more mainstream.
The Matias Group is always on the hunt for like-minded professionals who share the same passion for innovation and want to be at the forefront of change. To learn more about how to integrate these products into your offering, and explore becoming a partner of Matias Group, please CLICK HERE.