Ripple Blockchain Plans For Colombia Real Estate Fail To Get Off The Ground

Two weeks before newly elected President Gustavo Petro was sworn to the highest public office in Colombia, the previous administration’s Ministry of Information Technology and Communications announced it would be recording land titles on Ripple Lab’s XRP ledger in conjunction with software development firm Peersyst Technology.

Colombia spent 52 years wracked by a civil war that only ended in 2016, and inequitable distribution of property was one of the key issues. Real estate records were poorly kept and a transparent blockchain system of verifying property rights seemed like just the thing to build a firm foundation for land ownership.

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But the change in government brought a change in policy, and the project appears to be going nowhere. Juan Manuel Noruega Martínez, interim director of the National Lands Agency, tells Forbes that the project is not part of the Agency’s strategic priorities for 2022.

“This isn’t one of the projects defined in the PETI [Strategic Plan for Information Technologies], ” he added in a written statement in Spanish.

“It’s very possible that the project is now politically dead,” says Mauricio Tovar, co-founder of Blockchain Colombia, a community of crypto and blockchain entrepreneurs and academics in Colombia.

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Colombia’s history with land rights is a long and tortuous one. During the years of drug wars and FARC terrorist attacks, over 7 million were internally displaced, as reported by the UN Refugee Agency. After the historic peace deal between the Colombian government and the Revolutionary Armed Forces of Colombia (FARC) in 2016, property rights became once again a political priority as the accord called for a comprehensive land reform that would address the rural and indigenous communities in Colombia who felt disenfranchised.

Petro made Colombian history this year as the first left-wing and former guerilla fighter to be elected president. He campaigned on a platform of tax changes to alleviate the country’s high levels of inequality, but perhaps more radically, the administration promised to announce an agrarian reform in the coming months. Petro’s plan includes the state buying land currently not in use or being employed for illegal purposes and redistributing it to rural farmers. Given Petro’s political ideology, many are worried about the prospect of expropriation of land.

Iván Duque, Petro’s predecessor, took a different approach, prioritizing the allocation of real estate to rural and indigenous communities. During his term, over 1,700,000 hectares were put into the National Land Fund, meant to give these communities access to farmable land.

The partnership with Ripple and Peersyst sought to build on that, using blockchain technology to make land deeds involved in adjudication claims easier for users to view. At least initially, the blockchain system they devised was meant to register properties awarded by court adjudication, a common occurrence in Colombia because of the 2016 peace accord.

While talks continue between the companies and government agencies, the new administration seems to have deprioritized the project.

This would be a setback for Ripple, which is primarily known for its work with financial services. Branching out into public-private partnerships and real estate could have been a positive for the company, which is facing legal issues in the United States. The Securities and Exchange Commission (SEC) in the United States sued it in December 2020, alleging that XRP
XRP
, the native coin of the XRP ledger and the seventh-largest cryptocurrency according to Nomics, was an unregistered security. The suit has dragged on with no resolution. The SEC filed a request last week to support an earlier motion to exclude testimony from Ripple’s expert witnesses in the case.

The proposed initiative would have put land deeds on the XRP ledger. After the government finalized land reconciliation processes, supporting documents were to have been added by Peersyst on the blockchain. Peersyst then would have created a certificate with a QR code that anyone could scan and see the documents associated with the adjudication process.

The project only got as far as adding a single deed to the ledger—case number 11774. Also known as “El Invernadero,” this piece of land is located about 310 miles southwest from Bogotá. Adjudication paperwork shows that the land was formally registered to Omaira Quisaboni Maje’s in March 2021, before it was uploaded to the XRP ledger and had a certificate created last month.

A possible reason for resistance to the system is the wide distribution of the information. “This is not just Colombia that has got the data, the whole world has got it,” notes Antony Welfare, who works on global partnerships at Ripple Labs.

While Welfare and Ferran Prat, founder and CEO of Peersyst, say the information was already public, existing as certified and notarized government records, it wasn’t something that anybody in the world with a computer could call up to their screens.

Colombia isn’t the first country to have flirted with tokenizing land titles. Georgia, Honduras and Ghana have also launched pilot programs. But according to Tovar, it’s unlikely that governments will want to expand from there.

It’s at the point of widespread implementation, says Tovar, that “those incentives to not have transparency or to not want something that can’t be changed come into play.”

Updated August 30 to correct attribution in 14th paragraph.