Brazil tokenizes cows as collateral in first B3 credit deal

In Brazil, a farmer secured a R$100,000 (about $19,600) loan by using ten dairy cows as collateral – but instead of physically tracking the animals, their identities were digitized and used as tokens. This is one of the first times in the country that livestock have been formally tokenized to guarantee a financial transaction.

Summary

Fazenda Engenho Velho, a farm in Imbituva, Paraná, used livestock worth R$120,000 (about $23,500) as collateral. Target FIDC arranged the deal and officially recorded it on Brazil’s B3 exchange.

BMP Sociedade de Crédito Direto financed the purchase of cows using a type of rural loan called CPR-F. They then sold this loan to Target FIDC. Each cow was given a secure, digital ID thanks to smart collars from Cowmed that track their health, behavior and location. This allows the lender to monitor the cows – acting as collateral for the loan – more effectively than with traditional inspections.

How the tokenized cattle loan works

A CPR-F helps farmers raise funds and pay them back in cash when the agreement ends. According to B3, Brazilian law requires these financial agreements – both physical and financial CPRs – to be registered with a Central Bank of Brazil-approved institution to be legally valid. This registration verifies the details of the agreement and provides a public record for lenders and other authorized individuals.

This agreement didn’t convert cows into cryptocurrencies that could be openly bought and sold. Instead, it linked each cow to a loan agreement and registered them with B3 (Brazil’s stock exchange). Reports show there wasn’t a public blockchain system, specific token type, or marketplace created for these cattle records. So, the use of ‘tokenization’ here was primarily about tracking, overseeing, and using the animals as security for the loan – not enabling open trading.

Smart collars reduce information gaps for lenders

Cowmed collars constantly track each cow’s behavior and turn that data into useful alerts about their health, reproductive status, nutrition, and whether they’re experiencing heat stress. This information is then used to verify the animal is still alive, remains on the farm, and is in good condition, supporting loan agreements. This minimizes the need for lenders to physically inspect the animals repeatedly during the loan term.

Humberto Brenner, a director at FIDC, explained that banks often significantly undervalue cattle when used as loan collateral due to a lack of clear information about their location and health. For example, a cow valued at R$20,000 might only be considered worth R$8,000 as collateral. Ongoing monitoring could help establish a collateral value closer to the actual market price, but the lender still makes the final decision about any discounts.

This system prevents one animal from being used as security for multiple loans. Each cow is assigned a unique code linked to its specific loan transaction. If a cow dies, farmers can easily replace it with another healthy animal in the digital records. The system also includes roughly 20% more animals than needed as a safety net to ensure there’s always enough collateral covering the loan.

Tokenized collateral opens another farm credit route

According to Cowmed CEO Thiago Martins, their process involves turning actual cows – physical assets – into digital ones represented by a unique code that’s tracked constantly. This provides farmers with an additional form of collateral, which is especially helpful when getting traditional agricultural loans is difficult. The digital system also allows the financing company to easily monitor the condition of the cow throughout the loan period.

The money raised can be used for everyday farm costs, buying new equipment, or other expenses. Target FIDC is currently looking at four additional Brazilian farms and hopes to provide R$5 million in loans using this method by the end of 2026. However, these are just goals for now, and whether this approach becomes more common will depend on how much lenders want to participate, the loan interest rates, and how well the initial loans perform.

As a researcher studying this new financing model, I’ve found it has the potential to impact around 100,000 dairy cows currently tracked by our monitoring systems, representing a total value exceeding R$2 billion. Our initial estimates suggest that approximately 20% of producers within this group might be interested in adopting the product, which could unlock nearly R$400 million in available credit.

Brazil expands real-world asset tokenization

This new agreement for cattle trading comes as B3 increases its involvement in the technology supporting digital assets. As we’ve previously covered, the exchange is planning a platform to turn real-world assets into tokens and a stablecoin pegged to the Brazilian currency. B3 has also created digital tools to improve agricultural lending, including systems that verify collateral and prevent lenders from making the same loan against the same asset multiple times.

Brazil is expanding its use of digital tokens to include things like company debt, investment funds, and even farm products. Tether recently put $20 million into Mercado Bitcoin to help grow tokenized assets, facilitate payments and loans, and develop on-chain financial markets. Globally, the value of these real-world assets turned into tokens is expected to reach around $34 billion by 2026, with government bonds leading the way, but also including more commodities, private loans, and other types of investments.

This loan program, secured by livestock, is still relatively small. It’s being used to test if using verified information about real-world assets can make loans safer and increase access to credit for farmers. Whether banks and other lenders expand this approach will depend on how well farmers repay the loans, how smoothly animal replacements are handled, how accurately the program is monitored, and how effectively defaults are managed.

2026-07-24 14:37