Blockchain seen as boost to transparency, owners
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.
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)