Institutional investors are poised to revolutionize the commercial real estate market by buying blockchain-tokenized shares of high-value properties, predicts Kunal Bhasin, a digital asset co-lead at KPMG Canada. This shift could see family offices and other institutional investors owning a piece of iconic buildings like Toronto's Eaton Center.

Tokenization, a process that converts physical assets into digital tokens, can make it possible for these investors to participate in the market. "Tokenization of commercial real estate can actually enable that," Bhasin said, noting that it will likely become one of the largest institutional use cases in the crypto industry.

However, many institutional investors prefer to operate in a more controlled environment, where they can verify the identities of their counterparts. "Institutions recognize the efficiency that a decentralized financial technology brings, but they want to know the participants they are interacting with," Bhasin explained. Know-your-client checks will be crucial in this process.

While tokenized real estate is slowly gaining traction, there are already success stories. For instance, Bitfinex Securities facilitated a tokenized asset raise for a hotel at El Salvador's international airport, although it has yet to reach its full goal. Tokenized Treasurys and money market funds are also expected to expand in the near future, with the BlackRock USD Institutional Digital Liquidity Fund already amassing $462.7 million in value since its launch.

Despite the potential benefits, institutional investors are still hesitant due to the risk of fraud and scams. However, this "reputational risk" is decreasing as companies like KPMG implement robust infrastructure to identify and prevent illicit activities. "There is fraud in every industry," Bhasin noted, "but banks would be more likely to work with industry players that implement the necessary infrastructure and best practices."

In the future, institutions that do not offer digital assets will be at a significant disadvantage. "Soon, not being involved in crypto and digital assets is going to be a career risk," Bhasin warned. "If you are not offering it today, your competitors are — and they are getting that advantage over you."