According to The Block, JPMorgan's blockchain subsidiary Kinexys is collaborating with S&P Global to test the carbon credit tokenization application.
JPMorgan's blockchain subsidiary Kinexys is collaborating with S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry (ICR) to test its upcoming carbon credit tokenization application.
The collaboration aims to establish a unified carbon credit token ecosystem to address the issues of fragmentation and lack of transparency present in the current carbon market.
Carbon credits are a tradable permit that allows companies to emit greenhouse gases within a certain limit. These credits are generated by emission reduction projects such as renewable energy projects, reforestation projects, or carbon capture technologies.
"Tokenization helps build a globally interconnected system, enhancing the integrity and trust of carbon market infrastructure." — Alastair Northway, Head of Natural Resources Consulting at JPMorgan Payments
Currently, EcoRegistry and ICR have completed preliminary testing on their respective registration systems; S&P Global will also begin testing on its "registry-as-a-service platform" soon. According to the press release, these three companies will also assess the feasibility of using the application for carbon credit tokenization, although the tool is still in development.
The focus of the test will include:
Lifecycle management of accounts, projects, and carbon credits
Technical connectivity
Data model compatibility
Functional integrity verification
Meanwhile, it has been reported that JPMorgan also plans to launch a deposit token similar to a stablecoin, named JPMD, and plans to issue it on the Base blockchain network. If realized, this would mark Kinexys's first deployment on a public chain.