Tether’s $100M Investment in LatAm Agriculture Firm May Be a Tokenization Play

As a seasoned researcher with a keen eye for emerging trends and a penchant for deciphering the connections between seemingly disparate entities, I find Tether’s latest investment in Adecoagro SA intriguing. While it might seem like an odd coupling at first glance, upon closer inspection, both companies share a common ambition – the tokenization of real-world assets.

The company that manages the $118 billion market cap stablecoin USDT, Tether, and a significant investor in a major agricultural firm in Latin America might seem unrelated at first sight, but they both harbor similar aspirations towards the tokenization of real-world assets.

As an analyst, I’m reporting that a leading stablecoin company has committed $100 million to purchase approximately 9.8% of Adecoagro SA (AGRO), a prominent agricultural conglomerate headquartered in Luxembourg. This acquisition is significant because Adecoagro is publicly traded on the New York Stock Exchange, as per a recent filing made with the U.S. Securities and Exchange Commission in August.

Adecoagro controls approximately 213,500 hectares of farmland and industrial infrastructure in Argentina, Brazil, and Uruguay, as stated on their website. Their operations span across the crops, rice, dairy, and sugarcane industries. They generate around 2.8 million tons of agricultural goods and over 1 million Megawatt-hours (MWh) of renewable energy.

Additionally, Adecoagro owns a portion of Agrotoken, an Argentine company specializing in the tokenization of agricultural commodities. This investment was made by Adecoagro in 2021, with the goal of turning grains into digital assets for trading or exchanging goods, services, and other assets, as stated in their annual integrated report.

Eduardo Novillo Astrada, both CEO and co-founder of Agrotoken, stated in a LinkedIn video that Adecoagro played a role in establishing Agrotoken and currently holds a 10% ownership share in the new company.

According to Novillo Astrada, Mariano Bosch, the CEO of Adecoagro, has consistently backed our endeavors. He possessed a forward-thinking perspective, recognizing that the concept he wanted to implement – tokenized land – is also a project we are jointly pursuing with Adecoagro and other significant agricultural partners.

Agrotoken boasts about executing tokenization transactions worth approximately $70 million involving over 250 merchants and 40 grain suppliers, while also engaging with over a thousand farmers. Moreover, it has tokenized around 230,000 metric tons of goods.

In partnership with Bosch, Agrotoken embarked on creating three stablecoins – SOYA, CORA, and WHEA. As explained by Novillo Astrada, these digital currencies are tied to grains, giving farmers the ability to have their own currency within the agricultural sector. This move underscores the strong link between blockchain technology and agriculture.

Agrotoken has previously collaborated with companies like Santander. In the year 2022, they teamed up with the massive Spanish bank to debut loans backed by tokenized agricultural products in Argentina.

Tether representatives did not respond immediately to CoinDesk’s request for comment.

Tether’s tokenized RWA plans

It’s no secret that Tether is eager to expand into the realm of tokenized assets, aiming to broaden their horizons beyond their already thriving stablecoin business. In the first half of 2024 alone, they recorded an impressive net profit of $5.2 billion.

As a crypto investor, I’ve been intrigued by the company’s issuance of the gold-backed stablecoin, XAUT. This token represents the largest offering of tokenized gold in the market with a staggering $615 million market capitalization.

In April, CEO Paolo Ardoino unveiled his plans for launching a platform designed to create digital representations of various assets such as bonds, shares, investment funds, and loyalty rewards points.

In June, the company unveiled a new token minting platform named Alloy, along with a “synthetic” US dollar token. This token can be generated by users if they provide XAUT as security. Essentially, Alloy enables users to create collateralized synthetic digital assets and it is set to become part of Tether’s digital asset tokenization platform, which will launch later this year, as Ardoino explained at the time.

Additionally, Tether made investments in various ventures throughout the previous year. These include an eco-friendly Bitcoin mining facility in Uruguay, a payment processing company based in Georgia, and a cloud computing corporation named Northern Data.