The Italian startup BlockInvest announced its plans for the tokenization of non-performing loans (NPL) within two projects. The first project will serve as a proof of concept, while the second will focus on the tokenization of Italian mortgage loans in case of their non-payment.

The market for non-performing loans in Italy peaked at 360 billion euros in December 2015. Since then, the volume of non-performing loans has decreased. BlockInvest, in collaboration with the Milan-based securitization consultant 130 Servicing, plans to issue securities based on digital assets directly on the blockchain. This will be a preparatory stage for the tokenization of non-performing real estate loans in partnership with Davis & Morgan.

BlockInvest, supported by Credit Agricole Italia and using Polygon (MATIC) technology, claims that tokenization will allow fractional ownership, increase liquidity, and make the market more accessible and manageable. The goal of tokenization is to minimize the impact of non-performing risks on the financial stability of the institution and to restore the health of the credit portfolio.

The Italian non-performing loan market has long been a concern for regulators. In January 2023, the Financial Stability Board (FSB) noted that the 2016 legislation helped reduce the volume of non-performing loans but left complex loans unpaid. The Council called on the Italian government to continue developing the market, modernize the judicial system to settle non-performing loans, and allocate more resources to address this issue.