Lending Leaders
Sorry Blockchain, Title Isn’t Going Anywhere with Wes Williams

We recently visited with cryptocurrency and blockchain expert, Wes Williams, attorney at RELAW, APC. Wes also has roots in the title and real estate industry, so we talked a bit about where, if and how blockchain could eventually fit in our space. We think you’ll agree that the conversation was educational as well as very interesting!

First, the basics. What is blockchain?

Wes walked us through the basics before turning to the impact on the title industry. Essentially, Blockchain is a decentralized database, a system invented to work around the need for banks to centralize their database and reconcile their ledgers among other banks. At its root, blockchain allows the exchange of digital ownership of an asset using cryptographic key pairs. As Wes put it, Blockchain disintermediates the middle man or need for single ownership of a database’s reconciliation.

Will it replace title agents or title insurance?

A resounding “no!” At least, not for a long, long time. Wes observed that this might conceivably be the case if all 50 states conducted property recording and title insurance like Iowa (mostly a state-dominated system), which is absolutely not the case. However, because the vast majority of jurisdictions use a deeds-based system, it’s vital that there be no anonymous parties. That anonymity is a core component of blockchain technology. That anonymity and the immutable nature of a blockchain entry would very likely lead to some very real fraud issues as well.

A regulatory wild, wild West

While Wes detailed a number of places where blockchain and the real estate industry can and will intersect, he pointed out that, at the moment, regulation and enforcement on matters of cryptocurrency and blockchain are quite ambiguous. He detailed the SEC’s determination that blockchain falls outside its purview, and would more appropriately be governed like a commodity or property to be regulated by the Commodity Futures Trading Commission (CFTC) instead. 

Both Jim and Wes agreed that, as the technology grows and adoption grows with it, the inevitable need for rule making at the court level will likely spur a cottage industry of expert crypto witnesses to help bring judges up to speed on the complexities of the matter. 

But will it be used in the title industry, and could it eventually replace title agents or title insurance?

Wes does believe that the title industry will eventually adopt some level of blockchain. That scenario, initially, will likely involve the technology’s smart contract capabilities, which would work similarly to an escrow account. Crypto banks could serve as the custodians of things like earnest money or the settlement, which would take the form of stable coin.

While Wes does not think the title industry will succumb to total replacement by blockchain or similar technologies any time soon, he concedes that, eventually, things will evolve. That might take the form of changed search and exam processes. However, Wes did tell us that, as AI evolves (significantly from where it is today), we may begin to see a more dramatic transformation to the duties of a title agent. That said, Wes remained adamant that the numerous, disparate entities governing the industry at the state, county and city levels, and how they end up regulating these new technologies, will likely be the ultimate arbiters of just how much things could change for the typical title agent.