Blockchain seen as boost to trans­parency, own­ers

Kyiv Post - - Business Focus - BY BERMET TALANT BERMET@KYIVPOST.COM

Ukraine is mov­ing its land reg­istry onto blockchain tech­nol­ogy to pro­tect own­er­ship rights and re­duce fraud.

The trans­fer of all land own­er­ship records onto s blockchain-based plat­form will be com­pleted by the end of the year., Act­ing Min­is­ter of Agrar­ian Pol­icy and Food Maksym Mar­tyniuk said in an in­ter­view with the Kyiv Post.

Blockchain tech­nol­ogy came into the spot­light with the rise of Bit­coin and other vir­tual cur­ren­cies, but it has gen­er­ated in­ter­est in other sec­tors, es­pe­cially pub­lic reg­istries and sup­ply chains.

This tech­nol­ogy stores data in in­ter­linked chains of blocks us­ing cryp­tog­ra­phy which makes it highly se­cure for dig­i­tal trans­ac­tions and keep­ing records. It is also re­sis­tant to un­sanc­tioned mod­i­fi­ca­tion of data­bases since any changes will be vis­i­ble across the net­work.

The change is meant to give landown­ers more con­trol over their prop­erty and pro­tect them from raiders.

“The sys­tem gen­er­ates a unique hash code for every trans­ac­tion with a land plot, which can be used to ver­ify data with the State Land Cadas­tre. This is ad­di­tional se­cu­rity for land own­ers. At the mo­ment the user iden­ti­fi­ca­tion uses an e-sig­na­ture or bank ID,” direc­tor of the State Land Cadas­tre depart­ment Ihor Slavin ex­plained.

In the past, typ­i­cal raider­ship schemes abused flaws in the State Land Cadas­tre which con­tains in­for­ma­tion about the law­ful own­ers of the land plots. As of Oc­to­ber, the State Land Cadas­tre has 18.8 mil­lion land plots reg­is­tered.

“Chang­ing the records, un­for­tu­nately, was largely prac­ticed by staff of the ser­vice [State Ser­vice for Geodesy, Car­tog­ra­phy and Cadas­tre], only they gen­er­ally had the au­thor­ity to change the in­for­ma­tion,” Mar­tyniuk said.

The Ukrainian govern­ment picked Bit­fury Group, a Dutch-reg­is­tered tech com­pany, that pi­loted the first blockchain land-ti­tling reg­istry in Ge­or­gia ear­lier this year.

The mod­ern­ized State Land Cadas­tre isn’t the first time that Ukraine has em­ployed a blockchain-based in­no­va­tion in pub­lic ser­vices. OpenMar­ket (CETAM), an e-pro­cure­ment sys­tem for seized prop­erty, switched to blockchain in Septem­ber.

Col­li­sion

Mov­ing State Land Cadas­tre to blockchain is only the begin­ning. The govern­ment plans to ap­ply the same tech­nol­ogy to the State Reg­istry of Real Rights Over Im­mov­able Prop­erty, ad­min­is­tered by the Min­istry of Jus­tice, too.

At the mo­ment, the data be­tween th­ese two reg­istries are not syn­chro­nized, which has le­gal ram­i­fi­ca­tions and cre­ates room for fraud.

“When a trans­ac­tion is reg­is­tered by a no­tary in the State Reg­istry of Prop­erty Rights, it is sup­posed to be au­to­mat­i­cally syn­chro­nized with the data in the State Land Cadas­tre. But it doesn’t oc­cur,” deputy busi­ness om­buds­man Iaroslav Gre­gir­chak, who re­cently re­leased a re­port on raider­ship at­tacks in Ukraine, said.

“The data ex­change be­tween the reg­istry and cadas­tre now oc­curs once a day when StateGeoCadas­tre re­ceives a file with all trans­ac­tions from the Reg­istry of Real Rights,” Slavin said.

This con­tra­dic­tion caused dis­putes over own­er­ship rights as well as mis­use for il­le­gal seizures of land plots.

The Min­istry of Jus­tice claims that it is the pri­mary source of own­er­ship rights to land plots in Ukraine. How­ever, lawyers and banks also re­quest ex­tracts from the State Land Cadas­tre, Gre­gir­chak said in an in­ter­view with the Kyiv Post.

The is­sue was rec­og­nized by the Cabi­net of Min­is­ters. In July it adopted a res­o­lu­tion that pro­vides for the mech­a­nism of real-time ex­change of data about land plots be­tween the two reg­istries us­ing cryp­tog­ra­phy.

“I be­lieve that the prob­lem is not in a lack of trans­parency as it is in the lack of ad­min­is­tra­tive ap­proach,” Grigochak said. “Per­haps, there would be more or­der if one state agency ran one com­pre­hen­sive reg­istry of land own­er­ship rights.”

Auc­tions for land

Ukraine banned sales of farm­land in 2003. Al­though the lift­ing of mora­to­rium, which ex­pires on Jan. 1, is one of the key re­quire­ments of the In­ter­na­tional Mone­tary Fund to ad­vance a $17.5 bil­lion loan pro­gram, the ban is likely to be ex­tended.

As a re­sult, the main way of trans­fer­ring prop­erty rights over a land plot is by lease.

The agri­cul­tural land mar­ket in Ukraine is de­pressed be­cause the sales ban lim­its ac­cess to credit. Banks are re­luc­tant to ac­cept land as a col­lat­eral and ren­tal prices are a frac­tion of those in Euro­pean coun­tries: $37 per hectare in Ukraine ver­sus $219 in Ger­many, $279 in Bul­garia and $672 in Nether­lands, the World Bank noted.

About 75 per­cent of Ukraine’s agri­cul­tural land in in pri­vate own­er­ship, and 25 per­cent, or over 10 mil­lion hectares, be­longs to the state and is dis­trib­uted by the State Ser­vice for Geodesy, Car­tog­ra­phy and Cadas­tre (StateGeoCadas­tre.)

In June, Prime Min­is­ter Volodymyr Groys­man or­dered the StateGeoCadas­tre to lease state lands only through auc­tions. Mar­tyniuk. the act­ing agri­cul­tural min­is­ter, told the Kyiv Post that the de­ci­sion would put an end to “all schemes of the semi-le­gal dis­tri­bu­tion of land.”

Ukraine ranked 63 in the lat­est World Bank Do­ing Busi­ness sur­vey for the ease of prop­erty reg­is­tra­tion: a seven-step pro­ce­dure that takes 23 days on av­er­age.

A field in Kyiv Oblast on Oct. 23. While there is no func­tion­ing land mar­ket in Ukraine, the coun­try wants to make the reg­is­ter of land ow­er­ship rights more se­cure by in­tro­duc­ing blockchain tech­nol­ogy. (Oleg Pe­tra­siuk)

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