Agricultural Land Tokenization: Project Structuring

Gofaizen & Sherle can assess and structure an agricultural land tokenization project covering title, operations, income, the holding vehicle, investor rights and regulation. The mandate begins with the property and target investors, not the technology.

The first decision is what the token will legally represent, such as equity, debt or a contractual right. The token does not automatically transfer land title. Local counsel and providers retain their assigned responsibilities.

What does an agricultural land tokenization assessment cover?

The assessment treats the farmland and its operating arrangements as one system. It must verify the rights to farm, receive income and transfer the asset. This property tokenization review therefore begins with the land and contracts.

The initial review should cover:

• the registered owner, title boundaries, mortgages, liens, easements and transfer restrictions
• zoning, agricultural-use and environmental obligations, including separate water or access rights
• leases, farm business tenancies, crop-share agreements, management contracts and operator termination rights
• subsidies, insurance, material supply contracts, debt covenants and consents required for a transfer
• the proposed investor markets, distribution method and expected transferability.

How should land ownership, the SPV and token-holder rights be structured?

An SPV is possible, not universal. Alternatives include separate holding and operating companies, a fund or trust, or debt issued by the owner. The model depends on land law, tax, financing, investor eligibility and insolvency treatment.

The project must map and reconcile three record layers:

1. The land register or deed record that identifies the legal owner and registered interests.
2. The corporate, debt or securityholder record that establishes the investor’s enforceable interest.
3. The token ledger and any custody records used to issue, hold and transfer the digital representation.

The documents must identify the legally authoritative record for each right, resolve divergence and errors, and state whether an onchain transfer changes a right or triggers an offchain update.

In the United States, Interpretive Release Nos. 33-11412 and 34-105020, issued on 17 March 2026 and effective on 23 March 2026, distinguishes securities tokenized by or on behalf of the issuer from those tokenized by unaffiliated third parties, and notes that the holder’s rights in the token may differ materially from the rights of a holder of the underlying security, including economic and voting rights. Format, onchain or offchain, does not change the application of federal securities law. The Release supersedes the earlier staff statement on tokenized securities, which should no longer be cited as authority.

The structure should address voting, information, distribution and enforcement rights, priority in insolvency, new debt, related-party transactions, dilution, operator removal and amendments.

How are farmland income, governance and reporting designed?

The income model should distinguish land and operator cash flows where they arise in different entities or contracts. Rent, crop proceeds, operating profit and sale proceeds need separate definitions when relevant.

A workable model specifies:

• which entity receives each income stream
• which expenses, taxes, debt service and reserves are paid before distributions
• who approves budgets, capital expenditure, refinancing and operator replacement
• how asset valuation, crop or lease performance and material incidents are reported
• how the investor register, wallet records, accounting ledger and bank movements are reconciled.

The distribution waterfall must match the token and entity documents. Automation can apply an approved calculation, but cannot resolve an undefined expense, disputed valuation or operator conflict.

Which investor and jurisdiction restrictions must be resolved?

The locations of the land, issuer and investors create separate legal tests. A global wallet whitelist cannot replace a jurisdiction-by-jurisdiction eligibility analysis.

These are framework-level checks. A project-specific legal opinion requires the relevant US state, UK land jurisdiction or EU Member State to be identified before the ownership and investor model can be assessed.

What must be resolved in due diligence, custody and exit planning before launch?

Custody and control concern different assets and records. The registered proprietor holds title subject to third-party rights. A registrar may maintain the investor record, while a custodian or wallet provider controls token access. The agreements must address lost keys, transfer restrictions, inheritance, errors and record mismatches.

Exit mechanics should precede issuance. They may cover sale, refinancing, redemption, buyback, replacement vehicles, default and winding up. The documents must define initiation, approvals, valuation, costs and distributions. Secondary trading is not guaranteed liquidity.

What does a G&S project-structuring mandate deliver?

A project-specific mandate can produce five core deliverables:

1. A feasibility and due-diligence record covering title, operating agreements, financing, income sources and material restrictions.
2. A proposed ownership, SPV, governance and token-holder-rights structure with alternatives where local law or tax advice remains outstanding.
3. A US, UK and EU classification and investor-restriction matrix limited to the selected property and distribution markets.
4. Functional requirements for onboarding, custody, payments, reporting, transfers, exceptions and reconciliation.
5. An implementation map covering documents, providers, responsibilities, dependencies, exit mechanics and launch-readiness conditions.

Gofaizen & Sherle can develop the legal and regulatory structure within an agreed scope. Local land counsel and providers remain responsible for their allocated work. The assessment does not guarantee clearance, investor access, liquidity or a successful offering.

To scope the review, provide:

• the property location and land-title jurisdiction
• ownership and operating documents
• income model
• financing
• investor markets
• current structure
• budget stage
• target launch date.