January 18, 2024 – Italian startup BlockInvest is set to revolutionize the non-performing loans (NPL) market by tokenizing these assets in two groundbreaking projects. The Italian NPL market, which peaked at 360 billion euros in December 2015, has been a significant sector in the country’s financial landscape. BlockInvest’s initiative marks a pivotal shift in handling these complex financial instruments.
In collaboration with Milan-based securitization consultant 130 Servicing, BlockInvest will embark on a proof-of-concept project to issue digital asset-based securities notes directly on the blockchain. This first project aims to demonstrate the viability of on-chain transactions for financial securities. Following the success of this initial phase, BlockInvest plans to partner with Davis & Morgan, a credit management company also based in Milan. The second project involves tokenizing distressed real estate credits acquired by Davis & Morgan, paving the way for the tokenization of financing agreements and related instruments.
BlockInvest, which enjoys the backing of Credit Agricole Italia bank and utilizes Polygon technology, asserts that tokenization will bring about fractional ownership, enhanced liquidity, and a more accessible market. The startup’s vision is to minimize the impact of non-performing exposures on financial stability and to rehabilitate the health of the loan portfolio.
The Financial Stability Board (FSB), in a report released on January 18, highlighted the challenges in the Italian NPL market. Despite legislative efforts since 2016, the market still grapples with complex “not likely to pay” loans. The FSB has urged the Italian government to continue fostering the NPL market, enhance the court system for quicker NPL settlements, and allocate more resources to address this issue.
BlockInvest’s venture into tokenizing NPLs aligns with Italy’s position as one of the most advanced countries in Europe concerning crypto regulatory frameworks. The startup’s innovative approach could potentially set a new standard in the management and liquidation of NPLs, not only in Italy but also in the broader European financial sector.