Verra, a Washington-based nonprofit, which runs the largest carbon offset registry, has proposed new rules on carbon credits trading when it comes to cryptocurrency. The move, announced on Aug. 3, aims to address worries over the anonymity of holders of digital tokens.
The organization opened a consultation on Wednesday that will run until Oct. 2 and that will analyze the ways blockchain tokenization could work. It will explore ways to prevent fraud, double spending and lack of know-your-customer standard in the crypto industry.
Verra’s announcement comes after crypto traders moved tens of millions of carbon credits to digital exchanges supported by investors. According to Trove Research, the move accounts for $23 million, or 28% of all carbon credits.
Data from Ecosystem Marketplace reported that the voluntary market for carbon credits achieved a $2 billion value last year from $520 million in 2019. A company could count a carbon credit as “retired” and receive a receipt by removing it from circulation in the registry.
This May, Verra said it will no longer allow for credits to be “retired” to create new tokens, claiming that the practice is confusing. Instead, Verra proposed credits should remain “live” until claiming an environmental benefit to “retire” them.
In addition, Verra said cryptocurrency platforms should share carbon tokens creators’ identities to prevent potential fraud. The platform is also considering whether those who swap tokens should reveal their identities as well.
Last week, the Integrity Council for the Voluntary Carbon Market (Integrity Council) published draft standards for the rapidly growing market of carbon credits. These draft standards did not address the topic of cryptocurrency. The Integrity Council is an independent governance organization that aims to ensure that the voluntary carbon market aids emissions reductions and a “just transition to 1.5⁰C.”