Santander Launches Commodity Token Collateralized Loans

Bob Mason
Updated: Mar 8, 2022, 10:04 UTC

Santander launches a new collateralized loan product for Argentine farmers, who can place tokenized commodities as collateral.


In this article:

Key Insights:

  • Santander rolls out Agrotoken-collateralized loans for Argentine farmers.
  • Farmers can also exchange Agrotokens for seeds, fuel, vehicles, machinery, and services.
  • Santander and Agrotoken plan to target Brazil and the U.S later this year.

Bank Santander is a Spanish multinational financial services company. The bank has a presence in all of the global financial centers.

This week, Santander launched loans collateralized with tokenized commodities.

Santander Commodity Token Collateralized Loans

In February, Santander offered Argentine farmers loans collateralized with tokenized commodities. Working with agricultural commodities token platform Agrotoken, the bank is targeting the agriculture sector with blockchain and digital assets.

According to the report, Agrotoken projects that Santander will issue loans collateralized with agricultural commodities tokens to 1,000 farmers within the next 6-months.

Tokenized agricultural commodities include corn, soybeans, and wheat.

Santander also reportedly plans to launch the product in Brazil and the U.S later this year. According to Statista, the U.S, Brazil, and Argentina are among the world’s top five largest corn producers.

Agrotoken Takes Agriculture Digital

Agrotoken provides a platform catering for the trading of grains. The platform converts grains into digital assets. Holders of Agrotoken converted digital assets can store or exchange tokens for inputs, and services, among others.

Electronically, holders can exchange Agrotokens for seeds, vehicles, machinery, fuel in addition to using them for collateralized loans.

The value of Agrotkens is linked to the price of gain. For farmers, 1 Agrotoken is equivalent to 1 ton of grain. Buyers and sellers send and receive Agrotokens via Agrotoken wallets.

Agrotoken is built on Ethereum (ETH), Polygon (MATIC), and Algorand (ALGO).

Santander Takes DeFi Model to Build Agriculture Loan Book

In the world of DeFi, crypto holders can obtain crypto-collateralized loans across DeFi platforms. As a result of crypto market volatility, crypto loans are over-collateralized.

In other words, borrowers can only receive a percentage of the total crypto value that they put down as collateral.

In the world of agriculture, commodity prices are also volatile. Agrotokens listed the corn, soybeans, and wheat tokens on Matba Rofex, used for trading futures and options contracts on agricultural products.

The listing on Matba Rofex enables Santander to offer Agrotoken-collateralized loans. However, it is unclear whether Santander applies any haircut to collateral placed with the bank.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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