Engenho Velho, a farm in Paraná, Brazil, has become the first in the country to secure a loan backed by tokenized cows. Ten cows valued at 120,000 reais (~$23,300) were used to secure a loan of 100,000 reais (~$19,400), according to CNN Brasil.

The operation, structured as a CPR-F, was conducted by BMP Sociedade de Crédito Direto, a direct lending company accredited by the Central Bank of Brazil. BMP then transferred the rights to this credit asset to the Target FIDC fund, which registered the transaction on the B3 exchange.

How Cow Tokenization Works

The tokenization of cows is managed by the agri-tech startup Cowmed. The cows are fitted with smart collars that monitor their health, behavior, and geolocation in real-time. The collected data is converted into an encrypted digital identifier linked to the loan agreement, eliminating the need for physical farm inspections.

“We took a living, tangible asset—a cow—and transformed it into a digital asset with a unique code that is tracked in real-time. This digitization allows it to be officially registered on B3 as a security,” said Cowmed CEO Thiago Martins to CNN Brasil.

Benefits for Farmers

Previously, banks applied discounts of up to 60% when valuing livestock due to a lack of reliable information about the animals' condition and location. Thus, a cow worth 20,000 reais would only serve as collateral for 8,000. Target FIDC director Umberto Brenner noted that “monitoring eliminates this uncertainty.”

This scheme emerged amid a deepening credit crisis in Brazil's agribusiness sector. According to Serasa Experian, the number of bankruptcy protection applications in the industry reached 1,990 in 2025—nearly four times the 534 applications in 2023.

Risks

To mitigate the risk of animal death, the deal includes a protective buffer: approximately 20% more cows are initially included as collateral than required. If one of the cows dies, the producer can replace it in the system—the platform will generate a new hash code for the replacement animal.

However, live cattle remain a more volatile asset than bonds. Disease outbreaks or falling dairy prices could devalue the collateral before the sensors have a chance to update the status.

Scale and Plans

Currently, Cowmed monitors around 100,000 cattle across 1,200 farms in six countries in the Americas—Brazil, the USA, Canada, Uruguay, Paraguay, and Bolivia. The total value of the herd is estimated at about 2 billion reais (~$395.4 million). The company predicts that within two years, up to 20% of these animals (around 400 million reais, or ~$77.6 million) will be tokenized as collateral.

Target FIDC is working on four more deals using a similar model with other producers and plans to issue around 5 million reais (~$971,000) in loans under this model by the end of 2026.

In March, the INDEX project announced the launch of tokenized oil linked to global benchmarks Brent and WTI.