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- Kinexys de JPMorgan is associated with major registers to launch a blockchain platform for carbon credits in Tokenization.
- Tokenization aims to improve transparency, efficiency and liquidity on the voluntary carbon market.
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According to a Wednesday report, the blockchain and digital assets of JPMorgan is developing a new infrastructure fueled by the blockchain for carbon credit tokenization.
Carbon credit represents a ton of CO2 removed or avoided, generally renewable forest or energy projects. Tokenized credits are digital carbon shifts recorded on a blockchain.
In partnership with three main carbon registers, including S&P Global Community Insights, Eoregistry and the International Carbon Register, the team launches a pilot to create digital tokens linked to the credits listed in registry systems supervised by the three companies and retrace their life cycle from end.
Alastair Northway, which oversees the natural resources strategy at JPMorgan Payments, said in a press release that tokenization could create a global system that strengthens trust in infrastructure and improves transparency, stimulating market liquidity.
JPMorgan said that carbon markets are faced with challenges, including ineffectiveness, lack of standardization, transparency and market fragmentation. The bank suggests a single token carbon ecosystem where credits are perfectly portable between sellers and buyers could help solve these problems.
The recent JPMorgan report on digital assets and carbon markets indicates that carbon is a class of assets ready to ripen as the infrastructure improves and that innovation progresses. However, the bank has warned that not doing so could further erode confidence and demand on a market that has contracted and stagnated in the past two years.
The bank also notes that past tokenization efforts have raised concerns about market integrity, in particular risks such as double counting and trading in retirement credits.
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