Brazilian farmers are beginning to use tokenized dairy cows as loan collateral as access to agricultural credit becomes more difficult. In a pilot transaction in the southern state of Paraná, a farmer pledged 10 tokenized Holstein cows to support a 100,000-real ($20,000) loan.

The deal marked the first time livestock-backed collateral was registered on B3, Brazil's main stock exchange and financial market infrastructure provider. The cows were valued at about 120,000 reais, meaning the collateral exceeded the value of the 100,000-real loan.

Cowmed and Target FIDC, a fund that invests in credit receivables, structured the transaction by giving each animal a digital identity connected to B3's registry. The arrangement is designed to make ownership easier to verify and to reduce the risk that the same livestock could be pledged more than once as collateral.

AI Collars Monitor Livestock Collateral

Cowmed monitors each animal through its AI-powered Smarty Collar, which tracks the cow's health, location and behavior. That data is tied to a unique digital identity used in the loan agreement, giving lenders a mechanism to confirm that the collateral remains available while the loan is outstanding.

"We take the cow, which is a real and tangible asset, and transform it into a digital asset backed by a unique code monitored in real time," Cowmed representative Thiago Martins told CNN Brasil.

The system also gives farmers flexibility in managing the collateral. If an animal dies, the farmer can replace it. Farmers can also add more livestock to increase the total value of the collateral backing a loan.

Tokenization Addresses Brazil's Rural Credit Constraints

Brazilian banks have historically been reluctant to accept livestock as collateral because verifying ownership and tracking individual animals has been difficult. That has contributed to limited credit access and higher borrowing costs for many small farmers, a significant constraint in a country that ranks among the world's largest agricultural producers and exporters.

Cowmed said it already monitors about 100,000 dairy cows across more than 1,000 farms, with the herd valued at more than 2 billion reais. The company estimates that roughly 20% of those farms could eventually use tokenized financing, potentially unlocking as much as 400 million reais in agricultural credit.

The model aims to link rural assets more directly with Brazil's capital markets by giving lenders greater confidence in livestock-backed loans. Broader use, however, will depend on how the system performs in areas including collateral tracking, loan repayment management and default handling. Brazil established a legal framework for virtual assets in 2022, providing regulatory clarity that has encouraged institutions like B3 to explore tokenized financial products.

B3 Builds Digital Asset Infrastructure

The pilot comes as B3 expands its work on tokenized assets. The exchange is developing a platform for tokenized real-world assets and a stablecoin pegged to the Brazilian currency.

The project reflects a broader shift in digital finance, as traditional assets are increasingly being moved onto blockchain-based platforms. Tokenized real-world assets accounted for $34 billion in value in 2026, led by US Treasuries, followed by commodities and private credit.

Analysts expect the market for tokenized assets to keep expanding in the coming years. McKinsey expects tokenized assets to be valued at $4 trillion in 2030, while Standard Chartered has projected that the market could reach as much as $30 trillion by 2034.