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JPMorgan’s Kinexys Partners with Top Registries to Tokenize Carbon Credits
In a move to revolutionize the voluntary carbon credit market, JPMorgan has announced that its digital asset division, Kinexys, is partnering with three top registries – S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry. The collaboration aims to tokenize carbon credits using blockchain technology.
The initiative seeks to address the numerous issues plaguing the voluntary carbon credit market, including liquidity problems, unclear pricing, and a history of irregular transactions. By leveraging the transparency and security provided by blockchain, JPMorgan hopes to create an infrastructure that will streamline the management, trading, and oversight of these certificates in voluntary markets.
Each carbon credit represents one metric ton of carbon dioxide either removed from or prevented from entering the atmosphere through projects focused on renewable energy or forest conservation efforts. By converting these certificates into digital assets recorded on the blockchain, JPMorgan believes it can provide an unbroken chain of ownership from issuance to retirement, thus preventing any potential irregularities and improving transparency.
The current market fragmentation, lack of unified standards, and limited access to clear pricing and transaction data have severely restricted the liquidity and credibility of these instruments. The partnership seeks to address this by developing a tokenized credit ecosystem that enables seamless transactions between buyers and sellers.
In its recent research report, JPMorgan highlighted that the voluntary carbon market is in dire need of modernization to sustain its growth. Without structural updates, it may continue to lose trust and relevance, much like it has over the past two years.
Banks and asset managers have already begun digitizing traditional assets, such as bonds and stocks, to optimize settlement and improve traceability. Similarly, JPMorgan is applying the same approach to a market that has faced criticism for greenwashing and has been plagued by failed digitalization attempts that compromised its integrity.
This endeavor aims to offer an infrastructure that enables carbon credits to be audited, traded, and managed efficiently and reliably.
Source: crypto-economy.com
