The Argentinian branch of the Spanish financial entity, Bank of Santander, will offer crop-tokenized loans to farmers. According to reports, the bank is partnering with Agrotoken to execute this proposition.
Agrotoken is a crypto startup that focuses on tokenizing crops. Collaborating with the Bank of Santander will eliminate the hassles encountered by borrowers in the traditional financial system, such as delays in approval and cumbersome requirements.
Leveraging innovation and DeFi, beneficiaries would be able to access loans timely without hiccups and information about the validity of their business. Not only will farmers benefit from this, but the broader agricultural industry will have unlimited access to financial products.
Accessing the Financial Product
Based on the Bank of Santander, accessing the product will depend on the consensus mechanism known as Proof-of-Grain Reserve. It means that there will be a ton of stored grains that backs each token in the transaction. This is the first of its kind in the agro world.
Agrotoken’s CEO, Eduardo Novillo, cherished the experience they are creating for farmers, who are often marginalized when accessing loans. Loan products backed by tokenized agro-commodities like wheat and maize will provide an opportunity for agro producers to access this financial product without limitations.
Banks Sees Opportunities in Blockchain
With blockchain technology becoming more adopted daily and DeFi growing, traditional banking bodies will continue to leverage the new technology to explore ways to serve humanity better. The regular financial system is limited in many areas, restricting loan access to larger businesses and important personalities.
Santander Bank is one of the few traditional banks that have realized the opportunities offered by blockchain technology. A couple of years back, blockchain and DeFi were seen as a competition, given their decentralized nature and alternative financial system that solved the bottlenecks seen in their traditional counterparts.
However, banks like Santander have woken up to the new reality. Interestingly, this isn’t the first time the bank is in the news for its crypto and blockchain initiatives. The bank is an active partner of Ripple Labs that helped facilitate XRP payments.
Venturing into the South American agricultural market proves Santander’s revolutionary vision in leveraging blockchain to provide financial solutions to the underprivileged. Bank of Santander is also looking beyond the collaboration with Agrotoken. The monetary entity has revealed it would invest more than $225M in the South American territory.
Despite the rarity of traditional banks offering crypto services, it isn’t the first time they are getting involved with crypto. Bank of Generali, one of Italy’s major private banks, announced it will offer BTC services to its private clients last year.
Brazil’s top investment bank BTG also unveiled a feature that allows users to trade BTC and ETH without a middleman.