Mark Fidelman, CEO of SmartBlocks, explains how the company tokenizes commercial real estate on blockchain and uses AI to shrink loan underwriting from 45-60 days to under an hour. The platform handles SEC compliance through attorney partnerships and enables secondary trading on decentralized exchanges like Uniswap.
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Scaling Smarter would like to welcome Mark Fidelman, CEO of SmartBlocks. SmartBlocks is a fractional investment platform where you can put anything on blockchain and start to bring in investors who can then buy parts of it. And now you, let's say a piece of real estate, for example, you can put on the blockchain and now you can have lots of people investing in that one piece of real estate and trading against it. So there's been, this promise has been around for a long time. Mark is probably the first one on a platform basis to bring this to reality. Welcome to Scaling Smarter, Mark.
Thank you so much, David. Pleasure to be here.
So tell us a little bit about this journey, how you got here.
Ooh, yeah. Journey. Okay. So I was in commercial real estate. I've always been in commercial real estate as a broker, as an LP, never, it's never been my line of work, but I've always been a hobbyist in it. Got my license to reduce the fees, which are a lot. And then got into crypto in 2016, hating Bitcoin because I thought it was a scam. Later I was introduced to Ethereum, said, oh my gosh, now you've got programmable money and you can build on top of this blockchain to do basically anything you want. And I became an instant believer just like that. For me, once I got word that crypto was gonna become a thing, I dove all in. I brought a bunch of companies public via ICO. Wow. Then also saw the writing on the wall about what was happening in crypto and all the scams and rug pulls and stuff like that. So I said, okay, I'm going to get on the security side of things. The security token or tokenization or RWA space is what we call it now because these are legal instruments. They're real securities. They're treated like securities. And it's still on the blockchain. It still provides liquidity like crypto. But it's, you're, it's almost impossible to hack. And I can explain that to you if you want. It's impossible to steal and you could borrow against it. You could sell it. You're no longer stuck holding that investment for the life of whatever asset the owner deems it, deems to hold it.
That's awesome. And it really opens up investing in things to a lot of people that would not normally invest in those things, like the whole point, real estate, any kind of luxury item or any kind of potential appreciating item. So tell me about the technology journey now. What, from the, your concept to bringing something to the market, what your experience has been.
Yeah, you can imagine how difficult it can be to bring something like this to market. We're not built on the blockchain, although we use the blockchain rails to issue our, the tokens. So the software from our perspective was built using third parties and then our own proprietary stuff. And we put it all together in a seamless way and it works just fantastic. Obviously, when you're dealing with securities, you have to have a lot of different things in place and API'd into the system, which we've accomplished. And we're pretty proud of what we put together.
Yeah, that must have been all by itself, just dealing with the SEC and all the requirements that you can be a security, considered a security. What was that journey like?
For us, the SEC won't talk to you, FINRA won't talk to you, so you have to go through attorneys. So, the attorney structured us in a way where we wouldn't be fined, we wouldn't be sent a Wells notice. Actually, nobody in the tokenization industry, to my knowledge, has been sent a Wells notice because we're all trying to comply with the law. And fortunately, with the Clarity Act coming up, there should be full clarity on What we're supposed to do or not do in the— by Thanksgiving is what they're predicting now.
I will keep my fingers crossed. Can people trade on the platform at this point?
Well, you can only buy on our platform. If you wanna trade, there's other platforms that we either set you up with or we'll create our own liquidity pool and do it on a decentralized exchange like Uniswap. It just depends on who's issuing the token and how liquid they want it to be.
So how have you used AI and workflow automation to help to bring this to fruition?
Yeah, on the AI side, we want to involve more AI on the underwriting side because we just, we don't just tokenize real estate, we do loans and bonds. So imagine having an AI do all the underwriting for individual banks or institutions or even individuals about what they're And presenting that information in a non-biased way.
What do you mean by AI doing the underwriting?
Right now, it's, I think the latest for to do a commercial loan, there's 10 people that have to touch it and it usually takes 45 to 60 days depending on how busy the institution is.
Mm-hmm.
Imagine getting all that done in an hour.
Yeah. You're saying just doing all of the analysis and confirmation and that whole process, right?
Yeah. All the checks. Yeah. All the things that happen in a commercial. Real estate transaction.
Yeah.
Looking at bank statements, everything you can imagine AI can do in an hour, maybe less than an hour.
Yeah. So that value proposition all by itself is worth a fortune.
Massive.
Yeah. I just interviewed somebody who was talking about this huge capital gains trend over the next 10 years being the biggest wealth transfer in history with people selling out of And capital gains. And so how do you protect the tax implications from $100 trillion of capital gains exchange? So this is one, this might be one of the ways of doing that, having a quick way of repurposing an investment before you're taxed on it as a way of growing a business or building a portfolio or managing money. I don't know.
It's funny you say that because you could 1031 into it if you know what you're doing. So let's say you sell a piece of real estate and you want to 1031 into another fractional-sized commercial property. You can do that. There's also other ways of setting up offshore trusts and all that kind of stuff.
Can you, could you 1031 into, from one thing into several other things?
You can. Yeah.
So there, so you could use this as a way of spreading your risk out, right?
You can.
Yeah.
That's what we recommend you do. You just have to, there's certain paperwork that's got to be filled out correctly. In order to qualify, but we know all the ins and outs of that. How—
I always ask this question— if you didn't have any technology limitations or budget limitations, what problem would you solve?
This related to my solution or any solution?
Anything. Answer it any way you want.
I would, I would invent AGI or ASI. I'd put it on robots and I'd command an army of robots to To help all of mankind. Imagine what a super intelligent robot could do that works 24/7, but not just one, hundreds of thousands. There's not really anything you couldn't do at that point.
As long as it's not preventing me from doing the things I want to do that maybe I shouldn't, I think it would be awesome.
Maybe you'd have more free time to do what you want.
Yeah. Yeah, exactly. And then do you have a favorite book that you would like to tell the guests about?
Favorite book related to business or just any book?
Yeah, any book.
Anything you think is— I would say everyone, if they haven't read The Fountainhead and Atlas Shrugged together.
Yeah, I knew you were gonna say that.
You're missing out.
I don't know why, but I knew you were gonna recommend Ayn Rand's books for some reason. Yeah, they are amazing. I have to agree. Those are phenomenal books.
And we're seeing part of that play out in a small way here and across the world. So these are cautionary books like 1984 was, but these are more relevant.
Yeah, I would agree. So I appreciate you coming on, Mark. Just as a reminder to my listeners, anybody struggling with a workflow automation or software development team or looking to figure out how to implement AI into your organization, because you can get 10x gains or even much more depending on what the thing is that you're using it for, please reach out to me, David Hirschfeld at tekyz.com. That's T-E-K-Y-Z. Mark, thank you for coming on to Scaling Smarter. Oh, I forgot to ask, how would people get a hold of you?
Yeah, the best way is to go to smartblocks.xyz or to reach me personally @MarkFidelman on almost every social platform you can find. Maybe we put that in the show notes, David.
Yeah, they'll— all those links will be in the show notes. Mark, thank you for coming on to Scaling Smarter.
