JPMorgan Chase Exploring Tokenizing Carbon Credits on Blockchain in New Trial: Report

Financial services giant JPMorgan Chase is reportedly looking to tokenize carbon credits with a trio of companies for a trial run.

According to a new report from Bloomberg, Kinexys, a blockhain arm JPMorgan, is teaming up with S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry to test a protocol that would tokenize credits listed in registries overseen by the firms.

The report says that Kinexys is exploring whether blockchain technology can be applied to regular activities.

In a statement, JPMorgan said that the tokenization of carbon credits could address current issues within carbon markets, such as market fragmentation, a lack of standardization, and transparency problems.

The bank went on to say that a system that would let credits be easily transferred between buyers and sellers could address these issues.

Carbon credits are permits that allow those who hold them to emit one ton of greenhouse gases and are intended to incentivize the reduction of emissions, such as carbon dioxide. They can be bought and sold through non-governmental voluntary markets.

In a previous report, JPMorgan said that the carbon asset class is “poised to mature as market infrastructure strengthens and innovation continues.” However, the bank also noted that if market infrastructure and innovation falter, so could trust and demand.

As stated by Alastair Northway, head of the natural resource advisory at JPMorgan Payments,

“Tokenization could support development of a globally interoperable system that adds confidence into the integrity of the underlying infrastructure. This technology could support greater information and price transparency, which could ultimately lead to greater liquidity in the market.”

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