Project for Tokenized Trading A blockchain-backed carbon credit market has been established by Neutral and DLT Finance, a German brokerage company. Carbon credits are financial instruments that corporations may use to offset their carbon impact; they represent forests and renewable energy sources.It is not the first effort to wager that blockchain technology can boost the multibillion-dollar carbon credit market—that is, the tokenized real-world asset (RWA) project.It is the first, nevertheless, to have obtained regulatory authority to run the exchange, notably from Germany’s financial regulator BaFin.
“We didn’t see anyone building the market infrastructure that would allow for traditional traders to interact with these assets,” Neutral CEO Farouq Ghandour said in an interview. He said his company is the “tech provider,” and DLT Finance provides “the regulatory backbone.”
The product takes the blockchain out of the hands-on experience for the user.It may be inferred that the ten commodity trading houses and brokers that Ghandour mentioned will not be required to consider tokenizing or decentralizing anything, nor will they require a MetaMask wallet.
Rather than being like any other closed platform for commodities swaps, the exchange would focus on providing considerably better liquidity for large-scale deals than what is often found on decentralized exchanges (DEX), according to Ghandour.
“There’s a lot of reluctance to work with DEXs,” Ghandour said, explaining why the crypto world’s existing blockchain-based carbon markets haven’t really caught on – and how his might. He said it’s very important for financial institutions to have a regulated counterparty.