Ripple Blockchain plans for Colombia real estate are not getting off the ground

Two weeks before President-elect Gustavo Petro was sworn into Colombia’s highest public office, the previous administration’s Ministry of Information Technology and Communications announced it would register land titles on the blockchain in partnership with Ripple Labs, creator of the Ripple payment protocol, and software development firm Persyst Technology .

Colombia spent 52 years plagued by a civil war that only ended in 2016, and unfair distribution of property was one of the main problems. The property register was poorly kept, and a transparent blockchain system to verify property rights seemed like just the thing to build a solid foundation for property rights.

But the change of government brought a change in policy, and the project seems 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 is not one of the projects defined in PETI [Strategic Plan for Information Technologies],” he added in a written statement in Spanish.

“It is 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.

Colombia’s history of land rights is long and convoluted. During the years of drug wars and FARC terrorist attacks, over 7 million were internally displaced, as reported by the UN refugee agency. Following the historic peace agreement between the Colombian government and the Revolutionary Armed Forces of Colombia (FARC) in 2016, property rights again became a political priority as the agreement called for comprehensive land reform that would address disenfranchised rural and indigenous communities in Colombia.

Petro made Colombian history this year as the first leftist and former guerrilla 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 agrarian reform in the coming months. Petro’s plan includes the state buying land that is currently not in use or being employed for illegal purposes and distributing it to agricultural farmers. Given Petro’s political ideology, many are concerned about the prospect of land expropriation.

Iván Duque, Petro’s predecessor, took a different approach, prioritizing the allocation of property to rural and indigenous communities. During his tenure, over 1,700,000 hectares were deposited into the National Land Fund, intended to give these communities access to agricultural land.

The partnership with Ripple and Peersyst sought to build on that, using blockchain technology to make land deeds involved in judgment claims easier for users to see. At least initially, the blockchain system they developed was for recording properties awarded by court decision, a common occurrence in Colombia due to the 2016 peace agreement.

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

This will 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 positive for the company, which faces legal problems in the United States. The Securities and Exchange Commission (SEC) in the United States sued it in December 2020, alleging that XRPXRP
, the original coin on the XRP ledger and the seventh largest cryptocurrency according to Nomics, was an unregistered security. The suit has dragged on without any 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 completed land reconciliation processes, supporting documents should have been added by Peersyst on the blockchain. Peersyst would then have created a certificate with a QR code that anyone could scan and view the documents related to the assessment process.

The project only got as far as adding a single deed to the ledger—case number 11774. This piece, also known as “El Invernadero,” is located about 500 miles southwest of Bogotá. The assessment papers show that the land was formally registered with Omaira Quisaboni Maje in March 2021, before being uploaded to the XRP ledger and having a certificate created last month.

A possible reason for opposition to the system is the wide distribution of the information, says Antony Welfare, who works on global partnerships at Ripple Labs: “It’s not just Colombia that has the data, the whole world has it.”

Welfare and Ferran Prat, founder and CEO of Peersyst, countered that the information was already public and existed as certified and attested authority registers.

Colombia is not the first country to flirt with tokenizing land titles. Georgia, Honduras and Ghana have launched pilot programs. But according to Tovar, it is unlikely that governments will want to expand from there.

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