Brazil’s São Paulo city government is piloting blockchain-based microloans for farmers, collaborating with fintech Tanssi to deploy loans through an app and payment terminals. The launch is slated for December 2025.
The pilot project aims to enhance financial inclusion and risk control in agriculture through blockchain technology. Due to its closed ecosystem nature, the initiative is expected to have little immediate impact on public crypto markets.
São Paulo’s government and fintech company Tanssi are driving this pilot project to issue blockchain-based microloans specifically for farmers. The initiative is designed to provide up to R$15,000 in loans to small farmers, utilizing a mobile application and payment terminals for distribution. The project leverages a private blockchain to ensure predictable transaction fees.
Promoting Financial Inclusion for Small Farmers
The collaboration between São Paulo’s government and the fintech company Tanssi is focused on improving financial accessibility for small-scale farmers. Luis Dal Porto, Director at Tanssi, highlighted the user experience, stating, "in practice, the blockchain isn't even seen. It is a mobile app that they offer to producers. They also have physical payment machines. It is an entirely closed ecosystem they offer to achieve more control of how the credit is used and to mitigate risk." The project employs a private blockchain to circumvent the volatility often associated with public blockchains. It also utilizes proprietary tokens with pre-defined expenditure rules to ensure responsible credit management.
Trend Towards Blockchain Solutions in Municipal Finance
This pilot project is expected to significantly improve financial inclusion among small farmers within São Paulo, potentially stimulating local economic activity. By integrating blockchain technology, the initiative aims to facilitate transparent loan issuance and more effective risk management, thereby assisting small farms in safely accessing essential capital.
This initiative underscores São Paulo’s broader commitment to integrating blockchain technologies into its public services. This aligns with other ongoing projects, such as the development of a digital identity system and the central bank's digital currency project, Drex. The primary objectives are to mitigate financial risks and enhance regulatory compliance in financial transactions.
Other municipalities in Brazil have also explored similar technological avenues. For instance, Santo Antônio da Alegria previously tested blockchain applications for local transactions. These transitions suggest a growing trend towards adopting innovative blockchain solutions that are specifically designed to address unique local needs, thereby promoting economic inclusivity and ensuring transaction stability.
The ongoing expansion of blockchain-driven financial solutions across Brazil indicates a potential for significant advancements in regulation and technological growth. The results derived from São Paulo's pilot program may influence broader policy-making and market behaviors, further solidifying blockchain's viable role in economic development strategies.