The asset tokenization market surprises us all the time with new markets embracing crypto technology to take their businesses further, at lower cost and with better results. Carbon credit tokenization is a great example.
But what exactly is this credit, born out of a time of deep reflection on how we are dealing with the environment?
Reducing greenhouse gas emissions is an objective that has become fundamental to the future of life on the planet and companies around the world are encouraged to invest in sustainable projects and actions to achieve this goal.
Carbon certificates represent the removal of carbon from the atmosphere and are a valuable financial asset in a market that generated €229 billion worldwide in 2020.
With companies and individuals interested in acquiring credits, the token can be the differentiator, but what do we really have in this scenario?
BLOCKBR, a company that develops tokenization infrastructure, is going to talk about it!
WHAT ARE THE ADVANTAGES OF BUYING CARBON CREDITS
MEET REGULATORY COMPLIANCE
In some regions, companies have a legal obligation to offset their carbon emissions and sometimes fail to meet the targets set. Buying credits is a legal alternative to complying with environmental compliance and avoiding penalties.
CONTRIBUTING TO THE SUCCESS OF SUSTAINABLE PROJECTS
Projects to reduce gas emissions drive the development of clean and sustainable technologies, helping to mitigate climate change and develop the green economy that is beneficial to socio-economic relations and life on the planet.
HELP SOCIO-ECONOMIC DEVELOPMENT
In addition to reducing carbon emissions, many projects promote development in the regions in many different ways: job creation, improvements in water quality, access to clean energy and other benefits.
GAIN AN IMAGE OF ENVIRONMENTAL RESPONSIBILITY
A company that is concerned about the harm of carbon emissions to the environment and invests in carbon credits conveys an image of environmental responsibility, generates admiration in society and gains an important competitive edge.
WHAT IS CARBON CREDIT TOKENIZATION?
The tokenization of carbon credits consists of representing carbon certificates through tokens – encrypted digital assets – created on a blockchain [067-135]and offered through specialized platforms.
Tokenizing assets and rights is a trading model with excellent results in a wide variety of economic sectors, including
- Real estate tokenization, generating income through rents and appreciation;
- The tokenization of agribusiness, where companies raise funds through assets and production.
A company or project that manages to reduce carbon emissions in its operations, making them more sustainable, receives certificates that can be traded and one of the ways is to offer carbon tokens.
At first glance, it seems similar to the traditional form, but it has important advantages which we’ll see below.
BENEFITS OF TOKENIZATION FOR THE CARBON MARKET
DIVISIBILITY FOR GREATER LIQUIDITY
Tokenized carbon credit certificates can be fractioned into hundreds or thousands of parts, which allows for a low price per share and increases interest from a wider audience.
As well as being an excellent alternative for small investors to participate in this market, the carbon token makes the offer more liquid, speeding up the raising of funds for the company or project.
SECURITY, TRANSPARENCY AND TRACEABILITY
The record of each carbon credit token purchase is immutable and transparent on the blockchain, generating more security and total traceability for all those involved with the clarity of how the transactions were made – how the credits were generated and who acquired them.
Two aspects further reinforce these benefits for those who offer and invest in tokens:
- The creation of the Drex or digital real, which brings the Central Bank’s seal of approval to the use of cryptography in the official monetary system;
- The ongoing crypto regulation, which includes the creation of the figure of VASP, the digital asset service provider with a well-defined scope of action to promote more confidence for investors.
ACCESSIBILITY AND EFFICIENCY IN NEGOTIATION
Token transactions are peer-to-peer, i.e. they are carried out directly between those who offer and those who want to invest in tokens, without intermediaries from the financial system.
This is an aspect that makes all the difference in modern times when people want more freedom to decide, agility and cost savings.
What’s more, you can buy carbon tokens at any time and day. Blockchains work uninterruptedly and can be accessed from anywhere in the world.
For those who negotiate, it’s a key differentiator for achieving the goal in the shortest time.
CHALLENGES AND CRITICAL PERSPECTIVES IN THE TOKENIZATION OF CARBON CREDITS IN BRAZIL
TECHNICAL CHALLENGES
The country faces the challenge of developing the infrastructure and capacity to monitor, record and validate carbon emission reductions. Many projects end up struggling to meet the requirements due to a lack of resources and technical expertise.
Overcoming this scenario is crucial to providing legal certainty and credibility to the market and mitigating the risks of greenwashing, which is the use of fraudulent practices by companies to create an environmental responsibility that they don’t have or that is much less than the real thing.
REGULATORY CHALLENGES
There are no stable regulations for the Brazilian carbon market. The lack of clear and consistent policies hinders market growth.
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MARKET CHALLENGES
Here we are faced with a typical situation regarding the relationship between investment and return: the absence of attractive carbon pricing limits the incentive to invest in projects to reduce gas emissions.
The Brazilian carbon market faces strong competition from players such as the European Union and, combined with the previous challenges, is unable to offer competitive conditions to attract investment.
TOKENIZE ASSETS WITH BLOCKBR AND BOOST YOUR RESULTS!
Tokenization is a reality in the market, with an increasing number of companies and people generating revenue with tokens. Recent actions by BACEN and the digital real are increasing the credibility of the technology.
For the success of your project, it is essential to have an adequate and efficient tokenization infrastructure for the financial and other markets, comprising:
- Technical, fiscal and legal feasibility study;
- Issuance of tokens and smart contracts with transparent governance;
- Distribution of tokens on a simple and secure sales platform;
- Efficient and assertive tokenization governance.
Discover BLOCKBR’s infrastructure work for regulated and unregulated markets through an All-In-One platform that offers interoperability between assets and investors.
You don’t want to see your competitor get ahead to make more money.
Or do you want to?
BLOCKBR is a fintech specialized in building infrastructure that allows a simplified migration to tokenization, meeting the needs of a highly regulated environment.
Our main mission is to develop autonomy for the capital market so that it can move, grow and potentially access digital assets. We develop legal and technological solutions that create opportunities and simplify the way in which financial services will operate, from the structuring and new roles of the agents involved to the management and supply of these assets, generating efficiency, lower costs and greater speed of liquidity.
We take care of all the technological infrastructure for tokenization and regulation, simplifying your life so that you can take care of your customer relationships!
