Fubon Bank Partners with Ripple to Pilot Real Estate Tokenization in Hong Kong

Fubon Bank, a financial institution headquartered in Hong Kong, has unveiled its plans to initiate a real estate tokenization program in partnership with Ripple, a US-based fintech company.

The project, slated for the third quarter, aims to exploit the advantages of digital currencies and blockchain technology to streamline property transactions and lending processes.

Leveraging Blockchain for Efficiencies in Property Transactions

According to the report, as part of the pilot project, Fubon Bank will harness the Ripple Central Bank Digital Currency (CBDC) platform to tokenize properties, allowing the issuance of loans using digital Hong Kong dollars. The integration of blockchain technology will enhance security, transparency, and efficiency in property transactions while accelerating the loan issuance process using digital Hong Kong dollars.

Fubon Bank’s initial focus in the testing phase will be on existing customers who may qualify for additional mortgage loans. Through the collaboration with Ripple, the bank will tokenize the collateral and offer eHKD loans to customers, employing a 1:1 exchange rate between Hong Kong dollars and the test digital currency.

Customers will have access to loan information and relevant data through Fubon’s dedicated eHKD electronic wallet, which will provide real-time details such as loan-to-value ratios, stress tests, and property values.

Aligning Ripple’s CBDC Platform with XRP Ledger Technology

Eric Hsu, Executive Vice President and Chief Strategy Officer of Fubon Bank, emphasized that the use of Ripple’s CBDC platform, which incorporates digital Hong Kong dollars and tokenized real estate, aligns with the technology utilized in the XRP Ledger (XRPL). This technology operates on a secure and private ledger system.

Ripple has been actively engaged in numerous CBDC projects globally and is collaborating with several central banks, including trials of digital currencies for retail, cross-border, and wholesale payments in Bhutan. Additionally, Ripple is collaborating with the Palauan government on a US dollar-backed stablecoin.

Hsu further highlighted the maturity of Hong Kong’s payment ecosystem, which already includes popular methods like FPS (Faster Payment System) and Octopus cards, making it conducive to the adoption of digital Hong Kong dollars.

Starting with loan issuance was a strategic choice to drive the adoption of eHKD. As customers receiving digital Hong Kong dollar loans can utilize them for property purchases, investments, and other transactions, they will be encouraged to use the digital currency.

Exploring Future Use Cases and Incentives

While the pilot program currently focuses on mortgage loans, Fubon Bank is exploring potential collaborations with property developers to expand the use cases for digital Hong Kong dollars. For instance, young homebuyers could involve their parents, who could leverage their existing properties to acquire digital Hong Kong dollars for purchasing real estate from developers.

The success of such applications hinges on the growth of the digital Hong Kong dollar ecosystem, and Fubon Bank is considering incentives like “referral bonuses” to incentivize customers to embrace the digital currency.

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Adedoyin Aka

Adedoyin is a graduate of Law and a Crypto & Blockchain expert who strongly believes that Blockchain is the future. At TimesTabloid, she focuses on crypto and blockchain educational content.