With ‘The Box’, RealX takes aim at the big-ticket barrier in real estate

Blockchain has long held the potential to transform real estate, yet converting that potential into legally binding ownership has been difficult. In this conversation with ET Digital, Manish Kumar, Co-Founder & CEO, RealX, explains how its tokenisation infrastructure aims to bridge that gap, the business opportunity it sees in fractional real estate, and what it will take for the model to scale in India. Edited excerpts.

The Economic Times (ET): For someone unfamiliar with tokenisation, what exactly does ‘The Box’ enable? How does the process work when a real-world asset, such as a property, is converted into a legally enforceable digital asset, and what does an investor actually own? For someone unfamiliar with tokenisation, what exactly does ‘The Box’ enable?

Manish Kumar (MK): On the 11th of September, we launched the Open Infrastructure for Real World Assets Tokenisation as REDbox and Whitebox. RealX created a framework for property and other asset tokenisation for its own marketplace. However, we got a lot of requests from the market to open those rails for others too. This is when we developed REDbox and Whitlebox as infrastructure that will power tokenisation of properties and other assets, respectively. REDbox enables Real Estate Developers to offer tokenized sales of their inventory, and Whitebox enables other third - party platforms to offer tokenised products based on other assets (non-property and non-financial assets).


ET: How does the process work when a real-world asset, such as a property, is converted into a legally enforceable digital asset, and what does an investor actually own?

MK: Ownership of the property is legally divided into fractional units, each recognized under Indian property law as a distinct co-ownership right as defined in base property laws, not a symbolic slice. Each of these units is called a FRAX and 1 FRAX = 1 sq. inch of undivided area. This division happens at the level of the property's actual ownership rights, executed through a registered deed, not just on paper or promissory representations of them. All investors investing in the property therefore derive their Secure and Direct Rights (SDR) on the property (as number of FRAX owned by them) through a registered deed itself making it legally enforceable.

Each FRAX is then represented on-chain through RealX's SDR Mechanism, which binds the legal fractional right to a blockchain-based digital record. That's the key distinction: the token isn't a proxy or a claim on the asset–it's the enforceable right itself, made transferable and traceable through the mechanism.

So, when someone invests, they're acquiring a FRAX, which is a real, legally established fractional ownership right in the property and represented and moved through the SDR Mechanism. The blockchain layer is how it's held and transferred; the underlying right is what makes it enforceable.

ET: You describe tokenisation in India as not just a technology challenge but a question of legal enforceability. What is the legal architecture behind RealX’s Secure and Direct Rights (SDR), and how does it address the gap between putting an asset on a blockchain and establishing an actual ownership or economic right over that asset?

MK: Most of the platforms and other tokenisation initiatives in India were suffering because of the lack of a legal basis to do so. We ourselves have spent many years perfecting the model from a lot of angles, and only once we had completed 4 transactions across states and property types that we know for ourselves that we are ready to open this and scale it. And RealX’s SDR mechanism is a global first innovation - we are the only platform in the world to establish direct legal rights on properties and other assets within Blockchain Tokens. This SDR architecture is the intellectual property of RealX.

ET: What problem does ‘The Box’ solve for a real estate developer or asset owner that existing property platforms, fractional-ownership models or conventional digital transaction infrastructure cannot? What are the tangible benefits in terms of cost, speed, transparency, liquidity or access to capital?

MK: Let me try explaining this with some real and recurring use case-based problems and solutions for developers that REDbox can help with.

Let’s say a developer has a few commercial units for sale. But the ticket size is too large. He does not get too many buyers at that ticket size and therefore is looking at the same small size of UHNI’s who regularly invest. This UHNI pool is getting saturated in many micro-markets. The developers get many enquiries from people who want to invest smaller amounts, but that was not an option, and thus despite the interest, there is no deal closing still. Even when he gets someone with the ability to invest, he/she haggles for a deep discount. The developer knows that he doesn’t have options of many other buyers and if he doesn’t sell, he will carry forward a holding cost of the property as interest etc. keep getting added up.

The ability to tokenise breaks this logjam. The inventory can be sold off at a reasonable discount in a shorter time span, creating value for the developer and the investor. There is a lesser distress situation and better capital formation in the economy, even as the project finance lender also feels good with their returns not coming under stress.

ET: REDbox allows developers to launch tokenised property offerings under their own brands, while Whitebox allows businesses to build their own RWA platforms. What is the business model for RealX and MST Blockchain, and how large do you believe this infrastructure opportunity can become in India over the next three to five years?

MK: The business model for REDbox and Whitebox is essentially akin to platform-as-a-service. RealX doesn't compete with developers or businesses for the underlying asset — we provide the legal and technical rails (the SDR Mechanism, FRAX structuring, custody, and compliance layer) that let them launch their own tokenised offerings under REDbox or their own RWA platforms under Whitebox. For REDbox, our revenue comes from Platform Usage Fees from the investors and the developers’ respectively. Just like many of the regulated platforms abroad, RealX charges a certain performance fees when the investor exits too. Whitebox revenue models will be more custom as we engage with the platforms because RealX is not the visible and active layer here, unlike REDbox where the customer is co-owned by RealX along-with the developer.

On the opportunity size: India's real estate market alone is worth several trillion dollars, and only a small fraction of it is currently liquid or fractionally accessible to retail investors. If tokenised infrastructure captures, even a modest share of that over the next three to five years, this could become a multi-billion-dollar infrastructure layer. It's difficult at the moment to factor Whitebox revenues as it’s yet to see some asset classes being launched there–our revenue will be a derivative of the revenue projected by the platforms and the success of some of the Asset Classes and business models for them.

ET: There are already blockchain companies, fractional real-estate platforms and global tokenisation infrastructure providers operating in this space. What makes The Box meaningfully different, and what gives RealX and MST Blockchain an edge that is difficult for competitors to replicate?

MK: You are correct. There are many companies and platforms that can generate NFTs for anything, including properties. But that is a technical solution/product–delinked from any connection to the asset itself. That is the reason there has been a low acceptance of these companies. It’s because of this reason also that everyone was looking at regulators to come in with regulations adding undue pressure to enter a space that is still at its early stages. RealX as a matter of strategy remained low key and focused on how to make this work in a legally compliant way first. Only once we achieved the clarity and repetition that we opened it for everyone.

ET: RealX says it has already moved beyond experimentation and executed multiple commercial RWA transactions. Can you share the scale and nature of these transactions- the number of assets, transaction value, investor participation, and repeat customers and what have these early transactions taught you about the actual demand for tokenised real estate?

MK: RealX has moved beyond the experimentation stage, with four completed tokenised real estate transactions across four cities in three states, representing over Rs 22 crore in tokenised real estate assets. These transactions have attracted over 10,000 investors, including NRIs across multiple geographies, with 286+ investors participating across the four deals.

Importantly, we have also seen 10% repeat investment, indicating that a portion of investors are returning for subsequent opportunities and demonstrating growing confidence in the tokenised real estate model.

These early transactions have given us a clear indication that demand for tokenised real estate is moving beyond curiosity. Investors are increasingly looking for accessible, structured, and technology-enabled ways to participate in real estate, while the transaction experience has also helped us understand the importance of investor trust, transparency, ease of participation, and carefully structured opportunities in driving adoption.

ET: Blockchain has been promoted for years as a technology that could transform real estate by improving ownership records, reducing intermediaries, enabling fractional ownership, and creating liquidity. How much of that promise has actually translated into reality in the real estate sector so far, and where has the technology fallen short?

MK: To be honest, we have achieved almost nothing in our economy so far. This is because we haven’t yet really begun. We are the most populous, yet one of the youngest nations in the world with the largest crypto user base. Given all this, there has been a lot of hype around the subject. Despite this, there was too much negativity and confusion around tokenisation as many confused it with cryptos. Despite the government and RBI always clarifying that they welcome good use cases of Blockchain, the government could still not connect with real-world use cases. This context makes our work much more important.

Having said that, the world has definitely moved on and has realised the benefits of tokenisation. Today, the tokenisation and DeFi companies are as regulated as traditional finance companies. So, abroad there is better acceptance and normality. Given that the implementation and acceptance game is still being played out, I think it's early days to count the benefits or to judge them.

ET: If tokenisation is ultimately to become mainstream rather than remain a niche investment or technology proposition, what are the biggest barriers still standing in the way? This can be regulation, taxation, investor protection, title verification, liquidity, developer adoption or secondary markets? And what needs to change for tokenised real estate to become a genuinely scalable asset class in India?

MK: The deterrents to scaling tokenisation include legally compliant technology rail. This is the most elementary component that has been missing so far. The other part is developer adoption, which is the key element to drive infrastructure adoption at scale.

Standardisation is another issue. Every platform launching its own tokens in its own standard will not help investors. Standardised offerings across platforms will drive better acceptance.

Regulation and Governance over the platforms, whenever it gets credibly created, will also drive better confidence. We can achieve this through direct regulatory involvement or through even self-regulation.

At the end, development of a deep secondary market can happen if all DeFi and TradFi players can collaborate and come together to participate. A well-developed secondary market will be key to scaling for all players in the primary market too. Realizing this, RealX is already engaged with multiple players for them to come together for its Unified Secondary Market (USM)