Legal Framework for Tokenization of Real Estate in Iran

Extended Abstract
 
Introduction and Objectives: The real estate sector is one of the main pillars of Iran’s economy and the most important repository of household wealth. Despite this significance, the country’s real estate market faces challenges such as low liquidity, high transaction costs, limited transparency, ownership concentration, and difficulty of access for retail investors. The traditional structure of real estate transfer, heavy reliance on physical documents, and complex administrative processes have caused serious obstacles to broader investor participation and the use of modern financing instruments. In such circumstances, emerging financial and real estate technologies, particularly blockchain-based asset tokenization, have been proposed as a novel solution to increase efficiency, transparency, and accessibility.
Real estate tokenization means converting rights and interests related to immovable assets—including ownership, usufruct rights, or cash flows—into transferable digital tokens on distributed ledger technology. This approach can enable fractional ownership, faster transaction settlement, reduced intermediation costs, and the formation of secondary markets. However, the implementation of such a model in Iran faces significant legal and institutional ambiguities, including the lack of a clear legal definition for asset-backed tokens, uncertainty regarding the legal nature of tokens, overlapping jurisdiction of regulatory bodies, and the incomplete compatibility of traditional real estate laws with digital mechanisms.
The aim of this article is to identify the legal and structural challenges of real estate tokenization in Iran, conduct a comparative study of international experiences and real estate retail investment models in Iran, and propose a coherent and localized legal and institutional framework that, while supporting innovation, ensures investor rights and market integrity.
Research Methodology: This research is applied in terms of purpose and descriptive-analytical and comparative in terms of method. Data collection was conducted through documentary research, including the review of scientific sources, research articles, policy reports, legal documents, and domestic and foreign regulations related to blockchain, digital assets, and real estate tokenization. Additionally, documents published by active platforms in the field of real estate tokenization at the international level have been studied.
In the first step, the fundamental concepts of blockchain and tokens have been explained, focusing on the distinction between decentralized registration technology and the legal nature of tokens. Then, different types of tokens from a legal perspective (payment tokens, utility tokens, securities, and asset-backed tokens) have been examined, and the position of real estate tokens in this classification has been analyzed. In the second step, the legal and institutional structure of Iran has been analyzed from the perspective of real estate laws, commercial laws, capital market laws, and document registration systems, and the gaps and ambiguities related to real estate tokenization have been identified.
In the third step, a comparative study of the experiences of selected countries with different legislative approaches has been conducted to extract successful models and common challenges. Finally, using thematic analysis, the findings have been categorized into four main axes—legal challenges, economic capacities, the legal description of tokens, and global regulatory models—and based on these, a proposed legal framework for Iran has been presented.
Findings: The research results show that the most important obstacle to the development of real estate tokenization in Iran is the lack of a clear legal framework for the definition and classification of tokens based on immovable assets. This ambiguity causes tokens to fall on the border between payment instruments, securities, or merely digital ownership documents, thus creating significant legal risks for investors and platforms. Furthermore, the multiplicity of potentially competent institutions—including monetary institutions, the capital market, the housing sector, and document registration—has caused overlapping responsibilities and the absence of a single decision-making authority.
The analysis of international experiences shows that in most countries, direct tokenization of physical ownership of real estate is rarely implemented, and the dominant models are based on the use of intermediary legal structures such as project-specific Special Purpose Vehicles (SPVs), investment funds, or securitization of cash flows. In these models, tokens represent interests or shares in a legal entity, and the official registration of property ownership remains within the framework of traditional registration systems.
Based on the findings, a three-layer institutional model is proposed for Iran:

A policy-making and coordinating body at the macro level for housing and tokenized assets;
An executive-regulatory body for licensing, supervision of disclosure, valuation, and compliance with regulations; and
A trusted intermediary body for verifying the underlying asset, preventing double selling or double pledging, and securely connecting to the real estate registration system.

The connection of these layers enables tokenization backed by immovable assets in Iran.
Discussion and Conclusion: The main argument of this research is that the success of real estate tokenization in Iran depends more on legal clarity, institutional coherence, and the design of investor protection mechanisms than on the technical infrastructure of blockchain. Global experiences show that real estate tokenization becomes sustainable and scalable when implemented in the form of recognized financial instruments and under strict supervision, rather than as a complete replacement for the official real estate registration system.
Accordingly, it is recommended that Iran adopt a gradual and risk-management-based approach. In the first stage, tokenization of interests, fund units, or cash flows of real estate projects should be implemented within the framework of capital market regulations and in compliance with transparency, fiduciary, and anti-money laundering requirements. In later stages, with the development of standards and executive experience, it is possible to move towards limited integration with the real estate registration system.
Ultimately, real estate tokenization can be an effective tool for increasing liquidity, attracting small investments, and improving the transparency of Iran’s housing market, provided that it is designed and implemented within a coherent, localized legal framework compatible with the country’s legal structure.
Acknowledgments: The authors consider it necessary to honor the memory of the late Ayatollah Seyed Ebrahim Raisi, the late President of the Islamic Republic of Iran, and sincerely appreciate his approaches and efforts in strengthening governance in the housing sector, emphasizing justice in access to housing, supporting development policies, and organizing the legal and institutional structures of this field. His special attention to reforming regulatory processes, transparency in the housing market, and utilizing modern capacities to improve the efficiency of this sector has inspired the analytical framework and general orientation of this research.
Conflict of Interest: The authors declare that there is no conflict of interest regarding the conduct and publication of this research.
JEL Classification: K11, K22, G18, L85, O33.