Future Of Crypto Carbon Offset Projects As Verra Suspends Blockchain And Crypto Tokenization

Verra, a certifier of carbon credit standards, said on May 25 that it would ban the conversion of withdrawn credits into blockchain tokens immediately, months after the Toucan cryptocurrency platform’s ambition to use the blockchain to alter the entire system of carbon credits collapsing.

In light of World Environment Day 2022, with its campaign for this year using the hashtag #OnlyOneEarth to advocate for revolutionary changes in policies and options that allow for a cleaner and greener environment, the ban implemented by Verra is an indispensable step towards to a sustainable life in harmony. with nature.

Trading in carbon credits with encryption has allowed people to trade in carbon credits that become cryptocurrencies. One of these symbols is Toucan’s BCT (a BCT represents a ton of CO2 removed from the atmosphere). However, the recent announcement by Verra, the world’s largest carbon credit program, points to a possible double-count fraud of retired carbon credits.

Also read:

A “retired credit” marks that your environmental benefits have been consumed. Therefore, Verra announced the immediate ban on the creation of tokens or instruments based on withdrawn credits. However, this has jeopardized the core mechanisms of crypto-based carbon trading platforms such as Toucan and KlimaDAO.

Verra intends to investigate the feasibility of “immobilizing” the credits in the accounts of the Verra Registry so that they are tokenized with the transparency and traceability required by market players, as long as it can be done in a way that prevents fraud and maintains environmental integrity.

After all, the overall goal of carbon credits is to offset environmental degradation.

Future of cryptographic carbon offset projects

Several tokenization blockchain blocks and cryptographic platforms use carbon credits registered in Verra. The credit is marked as “withdrawn” in the registry before creating a token to avoid double spending. However, Verra noted that some platforms leave credit active which leads to possible fraud.

Following Verra’s decision to stop the tokenization of withdrawn credits, Toucan’s core business will be discontinued, and the same could happen with KlimaDAO. Currently, it is not clear what will happen to the 22 million credits withdrawn that have already been placed in the blockchain. Both Toucan and Klima tokens have drastically lowered their price after Verra’s announcement.

However, proponents of cryptographic carbon still have some hope. Toucan believes he will be able to help Verra build a new “live” credit tokenization system as opposed to retirees to continue trading in tokenized carbon credits.

However, according to a TIME report, Verra is inclined to work on a project like Carbonplace created by a consortium of banks that includes CIBC and UBS. Carbonplace has similar goals to Toucan, but operates on a proprietary, closed system, unlike the blockchain. Verra believes that by choosing a more centralized project like Carbonplace, he would have more control over who buys credit as there was concern about the use of cryptographic tokens for grim purposes.

However, Verra also said that he will start a public consultation process to decide the future. The company says that the way forward does not have to be the banks, they could be any entity with sophisticated KYC controls and the infrastructure to perform these checks. Officials at Toucan and other cryptographic entities expect them to be involved in the decisions that are made.

Problems with carbon credit tokenization

Research suggests that some carbon credits that are tokenized by cryptographic platforms are not as green as they claim. Many carbon credits come from old projects that offer very little in terms of value and often do not need additional funding to function. And the idea of ​​some of these platforms eliminating these poor credits to force big business to buy better and more valuable carbon credits has been counterproductive.

In addition, there are fundamental problems in quantifying exactly how much CO2 a particular carbon offset project removes from the atmosphere, for example, afforestation projects may not produce long-term value as trees may die, be destroyed, or burn in forest fires.

In addition, there are widely documented incidents of fraud, double counting, and creative accounting that make a large portion of carbon credits unreliable, as one of these activities has led to the Verra ban.

With this there is a lot of ambiguity about the cryptographic future of carbon credits, however, with better regulations and framework, the blockchain system has the potential to revolutionize the carbon trading market.

(Edited by: Anand Singha)

Source link

Leave a Comment

Your email address will not be published.