Nasdaq has developed a digital technology targeting voluntary carbon markets, offering an advanced solution for digitising the issuance, settlement, and custody of carbon credits. This technology is expected to overcome inefficiencies in the existing market tools and significantly catalyse their expansion in the coming years.
Main Features of the Platform
Producing carbon credits often involves outdated technology and subsequent cumbersome processes, limiting the market’s potential. The newly developed Nasdaq technology aims to streamline this procedure. It digitises assets and offers an extensive set of APIs crucial for users interfacing with registry platforms similarly to other financial market infrastructures.
Developed over the past 18 months, Nasdaq’s new digital platform utilises smart contracts using DAML by Digital Asset, a leading firm supplying enterprise blockchain technology. It functions using a single or multiple nodes, leaving customers free to choose either an underlying database or an enterprise blockchain to suit their use and cost needs.
“There are obstacles to scaling voluntary carbon markets which we can help solve by giving registries APIs, allowing them to aggregate their data and provide seamless settlement instructions,” says Gerard Smith, vice president of Nasdaq’s Marketplace Technology business.
Improvements in Technology
The first use case of their technology will be the carbon credits space during which the technology will digitise the details of a bond issuance into a token. The same can then exist either on a database or an enterprise blockchain on a single node or distributed nodes. Nasdaq are currently integrating the technology to their central securities depository, allowing for the servicing of new asset classes, such as real estate, and facilitating the CSDs to tokenize assets they are currently servicing.
Nasdaq and Carbon Management
Nasdaq has been active in providing environmental-friendly solutions for some time now. It offers ESG solutions that measure corporates’ carbon footprints and provide sustainability reports for boards. Last year, Nasdaq acquired the majority stake in Puro.earth, a leading platform for carbon dioxide removal. Puro.earth has seen a modernisation of their carbon crediting infrastructure which is considered essential for maintaining trust and credibility. Nasdaq plans to extend its technology to other areas of the carbon market.