Kinexys by J. P. Morgan, the firm’s leading blockchain business unit, is developing an innovative blockchain application on Kinexys Digital Assets, its multi-asset tokenization platform, aimed at tokenizing global carbon credits at the registry level. This initiative involves exploratory testing with S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry (ICR). EcoRegistry and ICR have successfully completed testing on their registry systems, while S&P Global Commodity Insights plans to begin exploratory testing with its Environmental Registry, a customizable registry-as-a-service platform for full lifecycle carbon credit tracking and management. Future testing may also include their Meta Registry® technology. The global carbon markets face challenges such as inefficiencies, lack of standardization, limited transparency, and fragmented markets. Creating a single, tokenized carbon ecosystem that allows seamless movement and settlement of credits between buyers and sellers could help overcome these barriers. Alastair Northway, Head of Natural Resource Advisory at J. P. Morgan Payments, emphasized the voluntary carbon market’s readiness for innovation. He noted that tokenization could foster a globally interoperable system, enhancing confidence in the infrastructure’s integrity and increasing transparency and liquidity. Initially, all three partners will test the feasibility of carbon credit tokenization using Kinexys Digital Assets, aiming to make registry data more accessible to external stakeholders.

Testing will focus on account, project, and credit lifecycle management, emphasizing technical connectivity, data compatibility, and full functionality. Jonty Rushforth, Head of Product & Portfolio, Energy Transition at S&P Global Commodity Insights, expressed appreciation for Kinexys by J. P. Morgan’s recognition of their Environmental Registry’s value and their exploration of blockchain for asset record keeping and payments. He anticipates that, if successful, this could extend their environmental registry solutions to the financial sector, potentially driving a significant carbon market expansion. Juan Duran, CEO of EcoRegistry, highlighted the constant evolution of carbon markets and said integrating with Kinexys Digital Assets enhances ecosystem trust and transparency, marking a vital step in deepening the financial sector’s involvement. Oli Torfason, COO of ICR, conveyed enthusiasm for collaborating on building a modern, unified carbon market infrastructure, underscoring shared commitments to transparency, innovation, and developing high-integrity climate economy frameworks. These developments coincide with Kinexys by J. P. Morgan’s publication of a research paper exploring voluntary carbon market (VCM) opportunities, drawing insights from industry participants and this initiative. Key findings include: - Building trust in the VCM through blockchain’s transparency, traceability, immutability, and robust bank-grade infrastructure. - Tokenization as a driver for market standardization, requiring the creation and adoption of asset standards scalable across ecosystems. - Recognition that tokenization alone isn’t sufficient; additional tools like digital monitoring, reporting, verification, and connectivity to market service providers (e. g. , ratings agencies, insurers) are essential for improving project quality and transparency. Keerthi Moudgal, Head of Product at Kinexys Digital Assets, emphasized ongoing engagement with carbon market participants as central to product development and expressed optimism about tokenization’s transformative potential in the voluntary carbon market. This initiative underscores J. P. Morgan Chase’s commitment to advancing carbon market growth and development. In 2023, the firm published its Carbon Markets Principles outlining their perspective on the VCM’s role, current challenges, and strategies for supporting a more effective carbon market.