Commodity tokenization: gold, energy and agriculture

Tokenizing a commodity means creating a digital record on a shared network that represents a quantity of a standardized good, such as gold, electricity or soybeans. The idea is attractive because it allows small fractions and fast transfers.

The problem is that the good stays off the network. The gold is in a vault, the energy has already been consumed, the soybeans are in a warehouse or still in the field. This article explains how each case works, what Brazilian law already provides and where the risks lie. For the general concept, see what asset tokenization is.

What a commodity token is

A token is a unit recorded on a distributed ledger (DLT, distributed ledger technology), a database maintained by several participants. In the case of commodities, the token usually represents one of three things:

• Ownership of a stored physical quantity, such as grams of gold in a vault.
• A right to receive the product in the future, such as bags of a grain yet to be harvested.
• A measured attribute, such as proof that certain energy came from a renewable source.

In every case, someone off the network has to guarantee that the good exists, is held in custody and matches the tokens in circulation. That someone is the core of the risk.

The CVM (Brazil’s securities regulator) classifies this type of token in Guidance Opinion 40, from 2022, as an asset-referenced token, one that “represents one or more assets, tangible or intangible”. According to the opinion, it “may or may not be a security”, and that depends on the economic substance of the rights granted to the holder.

Gold: the most common case

Gold is the most tokenized commodity because it is standardized, durable and easy to store. The typical model: a company buys bars, keeps them in a vault and issues tokens equivalent to a quantity of metal.

A regulated example abroad: in September 2019, the New York State financial regulator (NYDFS) authorized Paxos Trust Company to offer PAX Gold, described in the announcement as an asset-backed token pegged to gold. The regulator said it had applied anti-money laundering, anti-fraud, consumer protection and cybersecurity requirements. The authorization is at state level and applies to that market; it is not a Brazilian rule.

In Brazil, gold has its own rule. Law 7,766/1989 says that gold intended for the financial market, in transactions with institutions of the National Financial System authorized by the Central Bank, is considered a financial asset from the moment it is extracted. The same law requires its origin and transactions to be proven by invoices or equivalent documents.

What to ask about a gold token:

• Where the metal is, who holds it and whether it is segregated from the issuer’s own assets.
• Whether there is an independent, periodic audit comparing metal in the vault with tokens issued.
• How redemption works: whether you can receive the metal, only its cash value, or neither.
• What the gold’s origin is and whether it is documented, since Brazilian law requires this proof.

Energy: the token represents an attribute, not the electricity

Electricity is not kept in a vault. It is generated and consumed almost at the same time. That is why what gets tokenized is usually a contractual right or a certificate about the energy, not the electricity itself.

The clearest case is renewable energy certificates (RECs). In Brazil, the Electric Energy Trading Chamber (CCEE) maintains the Brazilian Renewable Energy Certification Platform. According to the rules and procedures published by the CCEE, a REC is the instrument “that proves that 1 (one) MWh of electricity was generated from an eligible renewable source”. The platform records, tracks and validates certificates and its purpose is “to remove the risk of double counting”, that is, to prevent the same energy from being certified twice. Only issuers accredited by the CCEE can issue certificates bearing this platform’s seal.

Here is the point for anyone looking at a tokenized REC: if the token circulates on one network and the certificate is recorded in another system, the two need to be linked. A token that does not correspond to a uniquely retired or recorded certificate may represent the same energy twice, which is exactly the problem the official registry tries to prevent.

Agricultural products: the CPR as a starting point

In Brazilian agribusiness, the central instrument is the Cédula de Produto Rural (CPR, a rural product note). Under Law 8,929/1994, it represents a “promise to deliver rural products”, with or without collateral, and can also be settled in cash.

The law already deals with the digital form:

• Book-entry issuance. A CPR can be issued in book-entry form, using electronic processes, in a bookkeeping system of an entity authorized by the Central Bank.
• Mandatory registration. To avoid losing validity and effect, a CPR issued from August 11, 2022 must be registered or deposited within 30 business days with an entity authorized by the Central Bank.
• Financial asset. The law considers the CPR a financial asset for the purposes of registration and deposit with these entities.

This means a token linked to a CPR depends on the official registration of the note. If the token says one thing and the registry says another, legal ownership follows the authorized system. For similar structures, with payment flows, see receivables tokenization and how to tokenize credit rights.

Agribusiness risks are also specific: crop failure, weather, price, storage and the producer’s ability to deliver. Tokenization changes none of them.

When the token becomes a CVM matter

Law 6,385/1976 lists as securities, among others, “derivative contracts, regardless of the underlying assets” and collective investment contracts offered to the public. In the editorial team’s assessment, this creates two typical scenarios for commodities:

• A token that only tracks the price, with no right to receive the good, may come close to a derivative.
• A token sold with a promise of returns generated by the work of third parties may come close to a collective investment contract.

The final classification depends on a case-by-case analysis, as Opinion 40 says. If it is a security, the offering must follow CVM rules. The overview is in regulatory limits of tokenization and in crypto-asset regulation in Brazil.

The risks the token does not solve

Backing. The token is worth what the issuer actually holds or records. Without a reliable audit, you depend on the issuer’s word.

Issuer and custodian. If the company goes bankrupt, what happens to the backing asset depends on whether it is segregated from the company’s assets. Total loss is possible.

Price. Commodities fluctuate. The token does not protect against a fall in gold, soybeans or the value of certificates.

Scale. The Financial Stability Board (FSB), in an October 2024 report, found that the limited public data suggest tokenization adoption is still very low, though growing. A small market usually means little liquidity when you want to sell.

More on this in why tokenization does not eliminate risk and, for tokens that promise a stable value, in what stablecoins are.

Key takeaways

• A commodity token is a claim against whoever holds the good or records the attribute. The gold is in the vault, the energy was certified off the network, the soybeans are in the warehouse.
• In Brazil, financial gold, CPRs and renewable energy certificates already have their own laws and registries. The official registry is the reference, not the token.
• Before buying, check the backing, audit, asset segregation, redemption and CVM classification. The commodity’s price risk remains in full.