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Diving brief:
- JPMorgan Chase strives to allow carbon voluntary markets to issue blockchain tokens at the register which represent the property of carbon credits, allowing market players to issue, transfer and remove credits, The bank announced Wednesday.
- JPMorgan is currently exploring test processes with the carbon carbon registers S&P Global Commodity Insights,, Ecoregist and the International carbon register Thanks to its blockchain commercial unit, Kinexys, according to the July 2 version.
- The three registers test the viability of carbon credit tokenization, because JPMorgan hopes that its solution will provide more transparency of data on the market and will allow additional normalization of the market token, according to a report accompanying the advertisement.
Diving insight:
The contribution of the blockchain carbon registers and the creation of a “unique and tokenized carbon ecosystem” which allows credit sellers and carbon buyers to interact and transfer credits in a transparent manner, said JPMorgan, could help solve the problems of transparency, lack of standardization and fragmentation of the market.
The Bank is currently developing an application to allow carbon registers to represent the property, data attributes and the rules for assets in a digital token and directly emit credits on the Kinexys digital blockchain platform. JPMorgan launched the blockchain commercial unit to allow the tokenization of financial assets and use other advantages of the blockchain. The unit has treated more than $ 1.5 dollars in transactions in the three years since it started serving customers, according to on his web page.
JP Morgan Payments, head of the natural resources council, Alastair Northway said in the press release that “the voluntary carbon market is mature for innovation”.
“Tokenization could support the development of an interoperable system on the global scale which adds confidence in the integrity of the underlying infrastructure,” said Northway. “This technology could support greater information and transparency of prices, which could ultimately lead to greater liquidity on the market.”
The bank said in its report that native tokenization projects, such as the one it undertakes, “can be difficult to implement in cases of use based on mature markets with long -standing established registers and systems integrations”. However, JPMorgan said that, given the nascence and the relative concentration of carbon voluntary markets – where a small number of registers represent “85 to 90% of the assets delivered”, according to the report – he believes that there is greater faster adoption potential.
Although the creation of a tokenization standard, with integrated project and credit attributes, would help data transparency problems and the lack of standardization on the market, JPMorgan said that its application was “not an authority on (credit) quality”. The bank said that the role of the application was “to apply standardized data structures, improve transparency, strengthen resilience and allow users to assess and independently interpret the information available for specific projects and credits on our platform”.
The carbon registers will seek to allow external stakeholders to read and act more easily on registry data. In addition to the viability of token, the registers will test Kinexys’ capacities for the management of the account life cycle, the project and the credit and will include specific objectives to explore the technical connectivity of the application, compatibility with different data models and its global functionalities.
Oli Torfason, chief of the international carbon register, said collaboration represents an “important step towards a modern and convergent structure for the carbon market”.
“This collaboration reflects a common commitment to transparency, innovation and the construction of the infrastructure necessary for a climate economy with high integrity,” said Torfason in the press release.
