Santander offers agro-backed crypto loans in Argentina

Spanish banking and financial services giant Santander announced its plans to build a framework for offering loans backed by commodity-based digital tokens. The novel approach is being developed in collaboration with an Argentine startup pioneering cryptocurrencies backed by grains- the Agrotoken. The global banking corporation is running pilot tests in Argentina fine-tuning the validation process for finalizing the procedure. 

Loans against Grain Backed Digital Tokens

A recent press release by Santander Argentina confirmed the news of the test run of the agri-backed token. The tokens developed by Agrotoken enable producers to conduct transactions with their commodities. 

The token’s test run has been successfully conducted with validation and legitimate approvals on the software product and its applicability. Therefore, the press release reports that the initiative of linking financial services or products to agriculture-backed digital tokens is the first of its kind and features blockchain technology in its core architecture to expedite transactions. 

Mr. Fernando Bautista, the head person in charge of the agricultural business made the following statement: “This is the first time that a service platform uses blockchain technology and crypto assets to expand the agricultural credit market and release the business potential of the producer.” 

Also Read: Top Cryptocurrencies to Invest in 2022

Crypto Tokens Backed by Agricultural Grains

At present, there are 3 separate crypto tokens, each backed by a different grain. Agrotoken created  SOYA, CORA, and WHEA. As general logic suggests, the assets are respectively by soy, corn, and wheat. Each token is pegged to the US valuation of a ton of the associated grain delivered by the producer to the grain collector. Moreover, adecentralized blockchain framework then issues the token as a POGR(Proof of Grain Reserve), authenticating the existence of grains per transaction. The multichain infrastructure features a platform built using Ethereum, Polygon, and Algorand.  

Also Read: Innovation on Crypto Tokens Disrupt Wine Distribution

Application of Crypto Grains

One can mine and store the digital grain tokens in secure crypto wallets by the producers. One can easily trade the tokens across global exchanges, DeFi applications, and marketplaces. Farmers can also utilize these tokens on the Agrotoken website and trade them for seeds, equipment, machinery, or fuel. They can also receive a pre-filled credit card. 

Wrapping Up

Santander had made an announcement in November expressing their interest make investments over $225 million within 3 years. Once enforced, the project will enable cryptocurrencies to have a much larger and more direct impact on Argentina’s national economy and agriculture. It may also help in reducing the nation’s increasing inflation.