Yesterday Singapore carbon exchange CIX and the Carbonplace network announced that the two bank-backed organizations had completed a series of proof of concept transactions for voluntary carbon credits. Both organizations use blockchain.
One of the pilot’s objectives was to address compliance, or more specifically, know your customer (KYC) and anti-money laundering (AML) for participants, particularly the emerging market organizations selling carbon credits. The pilot demonstrated that the compliance process could be simplified, enabling shortened settlement times.
The participants in the pilots included carbon credit sellers Carbon Growth Partners and Sustainable Carbon, as well as Pavilion Energy, NatWest and Itaú Unibanco on the buyer side.
Standard Chartered is also one of the nine banks behind Carbonplace, which also includes CIBC, National Australia Bank, Itaú Unibanco, Natwest, UBS, BNP Paribas, SMBC and BBVA. It has multiple roles but most notably as a settlement network and plans to integrate with multiple marketplaces. It also provides a rulebook for transacting, acts as a distribution network and provides a carbon credit wallet.
“Resilient, flexible and modern infrastructure that ensures trust, access and transparency is essential for carbon markets to grow and function effectively,” said Bill Gilbert, Head of Carbon Markets at NatWest. “This drastic improvement in funds settlement and counterparty risk assessment in a blockchain environment will be pivotal in taking the carbon market to the next level and unlocking its true potential for delivering climate action at scale.”
ConsenSys is developing Carbonplace’s blockchain infrastructure and the solution is expected to launch in early 2023.