Definition ∞ Commodity Finance involves financial arrangements that facilitate the production, processing, and trade of physical commodities. This includes various forms of lending, hedging, and risk management specific to raw materials like oil, metals, and agricultural products. It supports the global supply chains of essential goods.
Context ∞ In the context of digital assets, Commodity Finance gains relevance with the advent of tokenized commodities, where real-world assets are represented on a blockchain. This allows for new methods of collateralization, trading, and settlement, presenting both opportunities for increased efficiency and regulatory considerations for digital asset markets.
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