Last week the Abu Dhabi Global Market (ADGM), the UAE’s international financial center, announced its partnership with AirCarbon Exchange (ACX) to create a regulated carbon credit trading market. ACX is a blockchain-based voluntary carbon marketplace that recently received significant funding from the Deutsche Börse Group.
The collaboration will work by using ACX’s distributed ledger technology (DLT) to tokenize carbon credits on the public Polygon blockchain. Although blockchain-based, ACX trades these credits in a similar way to a commodity market, with a conventional trade matching engine. Tokenization benefits the process by making carbon credit ownership easier to trace and allowing for real-time settlement.
The ADGM will regulate the carbon credits and offsets for both spot and derivative markets. While ACX plans to start with spot trading, it has plans for derivatives in the future.
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