Tokenized Cattle Used to Secure Bank Loan in Brazil
In Brazil the first loan transaction was recorded backed by a herd of tokenized cattle. The new model allows livestock to be used as tokenized real world assets (RWAs) to obtain financing.
FinTech company Target FIDC, which specializes in structuring transactions through Credit Rights Investment Funds (FIDCs), and agritech company Cowmed, which focuses on digital livestock monitoring, completed the first official lending transaction secured by tokenized dairy cattle. CNN Brasil reported the development.
The 100,000 Brazilian real (about $20,000) loan was registered on the B3 exchange and secured by 10 dairy cows from Fazenda Engenho Velho in the state of Paraná. The animals were valued at about 120,000 reais in total. The loan was issued as a Brazilian CPR-F agricultural receivables certificate, while BMP Sociedade de Crédito Direto acted as the direct lender. The receivables were assigned to Target FIDC, which registered the transaction on B3.
The companies expect the technology to bring livestock assets to the capital markets and make borrowing more accessible for farmers. The model is built on digital animal identification. Each cow is fitted with a smart collar that transmits real time data on its location, health, and behavior. That information is used to create a unique cryptographic identifier linked to the animal and registered on B3 together with the loan agreement. This approach allows the herd to serve as collateral without requiring physical farm inspections.
According to Target FIDC, the technology addressed one of the main challenges banks faced when lending to livestock producers, which was the inability to monitor the condition and location of pledged assets in a timely manner. As a result, the collateral value of cattle was traditionally discounted. For example, a cow with a market value of 20,000 reais might have been recognized by a bank as collateral worth only 8,000 reais. Continuous digital monitoring allows the collateral value to move closer to market value.
Another advantage of the model is protection against double pledging. Since each animal receives a unique digital identifier registered on the exchange, the same herd can’t be used as collateral in multiple loan transactions at the same time. If an animal dies, the farmer can replace it with another animal registered in the digital registry. Loan structures also include a reserve of about 20% additional animals to maintain sufficient collateral coverage.
Cowmed’s platform currently tracks about 100,000 dairy cows across more than 1,000 farms in Brazil and other Latin American countries. The company estimated the total value of the monitored livestock at more than 2 billion reais, or about $390 million. It expects about 20% of its clients to adopt the new financing model, creating a loan portfolio of roughly 400 million reais backed by tokenized cattle.
Tokenization technology is increasingly being used to attract investment. Analysts projected the tokenized asset market would reach $30 trillion by 2030, while also warning that the technology could fundamentally reshape the architecture of the global financial system.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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