Seth Priebatsch (Groma) on On-Chain Real-Estate (EP.466)
Oct 30, 2023
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Seth Priebatsch, founder and CEO of Groma, talks about his entrepreneurial journey and the founding of Groma, a company building a real-estate backed cryptocurrency. They discuss the tokenization of real-world assets and the steps Groma is taking to launch a REIT security on-chain. The regulatory landscape for digital asset securities in the US is explored, as well as the prospects of other categories of real-world assets being represented on-chain.
Groma aims to democratize real estate ownership by tokenizing real estate assets on the blockchain, making ownership accessible to everyone and promoting financial inclusion.
Groma's real estate backed cryptocurrency offers transparency, efficiency, and wealth equality, bringing second-order effects like increased community involvement.
Groma's regulatory process ensures compliance and aims to gradually open up access to involve non-accredited community investors, while collaborating with regulators to provide value to stakeholders.
Deep dives
Groma: Building a Real Estate Backed Cryptocurrency
Groma is a company focused on creating a real estate backed cryptocurrency that will be classified as a security. They aim to provide a stable store of value and a medium of exchange through a fully digital currency layer backed by real estate. The Groma REIT owns interests in multiple multifamily residential real estate properties, and the Groma coins are one-to-one representations of shares in the REIT. The tokens offer transparency, functionality, and composability, enabling holders to have proportional value, potential appreciation, potential loss, and the potential for dividends. The goal is to democratize real estate ownership and provide a liquid asset for short-term cash needs.
The Significance of Real Estate in Groma's Currency
Groma's currency is backed by real estate because land is the core input to most economic activities. Real estate, particularly multifamily residential properties, is a stable and valuable asset that affects wealth, stability, and stake in communities. By tokenizing real estate assets on the blockchain, Groma aims to make ownership accessible to everyone and promote financial inclusion. The ability to borrow against real estate assets on the blockchain can provide short-term cash liquidity without traditional intermediaries. This type of digital asset brings transparency, efficiency, and second-order effects like wealth equality and increased community involvement.
Regulatory Compliance and Capital Raising
Groma has gone through a multi-phased regulatory process to ensure compliance and create a legally sound foundation. They started with a private offering for accredited investors only and have now expanded to a 506(c) offering that allows general solicitation. The next step for Groma is to explore a Reg CF launch to involve non-accredited community investors. The goal is to gradually open up access while complying with securities regulations. The team works in collaboration with regulators and seeks regulatory clarity to build an ecosystem that aligns incentives and provides value to stakeholders.
The Vision of Co-Ownership and Community Participation
Groma's vision extends to having renters participate in the ownership of the Groma REIT. By owning Groma coins, renters become co-owners and have a vested interest in their homes and communities. This alignment of incentives promotes responsible behavior and community involvement. Groma aims to remove barriers between renters and owners, offering advantages such as eliminating security deposits or reducing fees. The ultimate goal is to create an ecosystem where everyone has a stake and benefits from the shared ownership of real estate assets.
The Potential of Real Estate Backed Cryptocurrency
Groma's approach of combining real estate with cryptocurrency offers a potential solution for wealth creation, stability, and financial accessibility. While previously skeptical of purely digital assets like Bitcoin, Groma recognizes the value of blockchain technology. As the world needs various digital currencies, having a real estate backed stablecoin can provide stability, accessibility, and value preservation. The broader use cases include blending, borrowing, and enabling renters to gain leverage ownership. Real estate-backed cryptocurrency has the potential to democratize ownership, revolutionize financial transactions, and drive positive social and economic outcomes.
