Banco Santander has announced it is exploring the possibility of developing crypto-secured loans related to agricultural products like soya beans, corn, and wheat.

The bank is working with Agrotoken, a global tokenisation infrastructure for agrocommodities, to create these new loans.

It said that the move would enable farmers and the agroecosystem to access a new financing system, expanding credit capacity through tokenised assets.

A pilot test has already been carried out with producers in Argentina to identify how the product works technically and operationally.

“This is the first global experience in backing loans with tokens based on agrocommodities such as soya beans, corn and wheat,” said Eduardo Novillo Astrada, chief executive and co-founder of Agrotoken. “Together with Santander, we are creating a number of financial products to provide farmers with a service where they can easily access a new system of credits backed by the sale of their grains.”

Santander said it is focusing on technology to provide better services, announcing in September last year that it will invest $225 million in this area and in Argentina.

“At Santander Argentina, we are leveraging technology and innovation to generate new business solutions that make life easier for farmers and expand their opportunities,” said Fernando Bautista, head of Agribusiness at Santander Argentina. “This is the first time that a financial services platform has used blockchain and cryptoassets technology to expand the agricultural credit market and unlock the farmer’s business potential.”

Each token will represent one tonne of grain sold and delivered by the farmer to a wholesaler. These tonnes of grain are also validated through a Proof of Grain Reserve (PoGR) certificate, a system which Santander says is “at all times transparent, secure, decentralised and auditable” through a modern security infrastructure.

When a farmer has their digital assets, the agrotokens can be used to carry out a number of transactions, taking into account the three price indices set in aggregate with the Matba Rofex group, which reflect in real time the value of the grains.

According to the bank, since the beginning of last year, several transactions have been carried out that demonstrate the usability of cryptoassets in exchange for different types of supplies, trucks, machinery and farms.

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