JP Morgan’s Kinexys partners with S&P Global to test blockchain for carbon markets

• JP Morgan’s Kinexys is collaborating with S&P Global Commodity Insights, EcoRegistry, and International Carbon Registry to test a blockchain application that tokenizes carbon credits at the registry level.
• The aim of the initiative is to improve market transparency, efficiency and trust by providing an interoperable and standardized digital infrastructure for the voluntary carbon market (VCM).
• The focus of the tests is on full lifecycle tracking and registry interoperability, supporting the company’s broader goal of scaling carbon markets through blockchain innovation.

Kinexys, the blockchain unit of JP Morgan, has launched the next phase of its carbon market initiative, developing a blockchain-based application for tokenizing global carbon credits. The solution—powered by Kinexys Digital Assets, the company’s multi-asset tokenization platform—will be tested with three leading players in the voluntary carbon market (VCM): S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry (ICR).

EcoRegistry and ICR have completed initial testing, while S&P Global Commodity Insights is conducting exploratory testing on its Environmental Registry, a customizable Registry-as-a-Service platform, with the possible future inclusion of its Meta Registry®.

“Carbon markets are constantly evolving. By connecting their core elements, we are strengthening trust and transparency across the ecosystem,” said Juan Duran, CEO of EcoRegistry. “Our integration with Kinexys Digital Assets is an important step toward expanding the financial sector’s role in this space.”

The new application aims to address inefficiencies, lack of transparency, and fragmentation in the global carbon market by enabling tokenized carbon credits that can be securely tracked and transferred between registries, buyers, and sellers.

“The voluntary carbon market is ripe for innovation,” said Alastair Northway, head of natural resources advisory at JP Morgan Payments.” Tokenization could support the development of a globally interoperable system that builds trust in the integrity of the underlying infrastructure. This technology could lead to greater information and price transparency, which could ultimately lead to more liquidity in the market.”

All three registries are currently testing the application’s core features, including account, project, and loan lifecycle management, data model compatibility, and technical connectivity.

“We are delighted that JP Morgan’s Kinexys recognizes the value and mission of our environmental registry,” said Jonty Rushforth, Head of Product & Portfolio, Energy Transition at S&P Global Commodity Insights. ” If these joint tests progress as hoped—and eventually include our Meta Registry®—this could extend our environmental registry infrastructure solutions to the financial industry and lead to a transformative expansion of the carbon market.”

Oli Torfason, COO of ICR, added, “This collaboration reflects a shared commitment to transparency, innovation, and building the infrastructure needed for a high-integrity climate economy.”

The announcement is supported by a research paper published by Kinexys that summarizes insights from carbon market participants and outlines the role blockchain can play in scaling carbon markets:

• Blockchain transparency can restore trust in carbon credit systems through traceable and immutable records secured by bank-grade infrastructure.
• Tokenization can catalyze standardization, provided a common asset standard is adopted across the ecosystem.
• Market infrastructure needs to evolve, with digital monitoring, reporting, and verification (MRV) technology, as well as connectivity to rating and insurance providers, to fully support scalability and quality.

“We look forward to continuing to work with carbon market participants to develop and implement new blockchain-based technologies for this ecosystem,” said Keerthi Moudgal, Head of Product at Kinexys Digital Assets.” We look forward to seeing the promise of tokenization become a reality and transform the voluntary carbon market from the ground up.”

This initiative follows JPMorgan Chase’s 2023 release of its Carbon Market Principles, which outline the firm’s long-term commitment to credible, scalable growth in VCM through financial innovation and robust infrastructure.

Source: esgnews.com