September 12, 2024

By Gerelyn Terzo, Global AgInvesting Media

Cryptocurrencies are known to have characteristics of commodities, and now the blockchain is increasingly making its way into the ag sector. Most recently, Tether Holdings, an early mover for digital assets known as stablecoins, has taken close to a 10 percent position in Latin American agro-industrial company Adecoagro, with operations in Argentina, Uruguay and Brazil. The deal, which came with a $100 million price tag, represents Tether’s push to diversify its holdings into the ag and food sectors. Tether (USDT) the digital asset is a stablecoin that is pegged to the U.S. dollar and thereby trades with less volatility than most cryptocurrencies.

With over 14,000 cows, Adecoagro is one of Argentina’s leading milk producers while also overseeing more than 193,000 hectares (476,913 acres) of sugarcane crops in Brazil for refined sugar and ethanol production. Since inception in 2002, Adecoagro’s production capacity at its Buenos Aires site has grown to 550,000 liters of milk each day including fluid milk, milk with cocoa and creams. In Córdoba, Argentina, the company boasts a milk-powder and semi-hard cheese processing capacity of 360,000 liters per day.

Owned by British Virgin Islands-domiciled iFinex, Tether is the third-biggest cryptocurrency, boasting a market capitalization of $118.3 billion. Its latest investment represents its foray into agriculture and food processing as it looks to grow its portfolio beyond sectors like renewable energy, AI and Bitcoin mining.

As the founder of a major stablecoin, which was launched in 2014, Tether could be looking to bring its knack for tokenization into the ag space. Tether was seemingly drawn to Adecoagro for its minority stake in Agrotoken, an agricultural digital platform focused on the tokenization of commodities. Agrotoken allows farmers to digitize their grains, using them as collateral to obtain financing for operations and other use cases.

Adecoagro and Agrotoken have developed a trio of stablecoins called soya, cora and whea, allowing food producers to use grains for currency in a move to integrate the blockchain — an immutable digital ledger that could bolster transparency in areas like the supply chain — into the ag industry.

Agrotoken CEO and Co-Founder Eduardo Novillo Astrada cheered the deal, posting on LinkedIn, “Tether, creator of USDT, one of the most important stablecoins, has acquired part of the company Adecoagro, who are also founders and investors of Agrotoken. Together with its CEO, Mariano Bosch, we’ve started the process to create our three stablecoins: soya, cora and whea, which allow farmers to have their own currency represented in grains. This is a clear sign of the connection between blockchain technology and agriculture. We saw it coming. And this is just the beginning!!”

Last year, Agrotoken completed a Pre-Series A funding round in which it raised $12.5 million, which included a $2 million contribution from card giant Visa. Through a partnership, Agrotoken and Visa have also made it possible for ag producers to use grains as a payment method with a card.

While Tether is a major player in blockchain innovation, the company has also experienced its share of controversy, including regulatory probes. In 2021, the company was fined $41 million by the Commodity Futures Trading Commission over allegedly misleading investors on the status of its U.S. dollar reserves that serve to back Tether tokens, suggesting there was sufficient backing when in fact the reserves were not fully backed, according to the regulator.

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