Germany Establishes a Crypto Carbon Credits Exchange

February 9, 2024

By Anjali Kochhar

Neutral, a tokenized trading project, has collaborated with DLT Finance, a German brokerage firm, to develop a blockchain-supported platform for carbon credits. These credits are financial instruments representing forests and renewable energy products, which businesses can utilize to counterbalance their carbon emissions.

This is not the first attempt to bet that blockchain technology can help the multibillion-dollar carbon credit market; this is the tokenized real-world asset (RWA) project. On the other hand, it is the first to introduce a regulated environmental asset trading platform.

Neutral CEO Farouq Ghandour stated in an interview  with Coindesk he “didn’t see anyone building the market infrastructure that would allow for traditional traders to interact with these assets.” He explained that his company is the “tech provider,” while DLT Finance is the “regulatory backbone.”

The product streamlines the blockchain aspect from the end-user experience. Essentially, the 10 commodity trading houses and brokers being onboarded won’t have to concern themselves with tokenization or decentralization and they definitely won’t require a MetaMask wallet.

Instead, the exchange intends to function like any other well-regulated platform for commodities swaps, according to Ghandour. He emphasized that it will offer significantly better liquidity for large-scale trades compared to what one might encounter on decentralized exchanges (DEXs).

Ghandour noted a significant reluctance to engage with DEXs, which explains why the current blockchain-based carbon markets in the crypto world haven’t gained much traction. He emphasized the importance for financial institutions to have a regulated counterparty.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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