Guest Post: Bloomberg for Green Tokens: Will companies need a holistic database for tokenized CO2-certificates in the near future?

Introduction

The EU Emissions Trading System (EU ETS) was introduced in 2005 to implement the Kyoto international climate protection agreement. It serves as a central instrument of the European Union to reduce greenhouse gas emissions in a sustainable and economically favorable manner. Members are the 27 EU member states, Norway, Iceland, Lichtenstein, and later the UK. The Swiss emissions trading system has also been linked since 2020.

Figure 1: Allowances and Emissions within the EU ETS since 2005

Representation of CO2-Allowances on Blockchains

Since its introduction, CO2-allowance trading has suffered many losses in terms of trust due to fraud, such as VAT tax fraud, recycling of allowances and theft through phishing attacks. At the EU level, countermeasures are being taken with registration obligations and serial numbers. A centralized Union registry and a special mechanism will also ensure that certificates, once used, cannot be reused.

Representation of CO2-Certificates on Blockchains

For the reasons mentioned above, an increasing number of project developers and certifiers in the voluntary market are also dedicating themselves to mapping CO2 certificates as tokens on the blockchain.

Figure 2: Estimated Development of the global Tokenization Market

Data Quality and Data Analysis are Key

However, the enrichment with data and the increase of providers in the market also offer some new challenges and the risk of transferring the fractionalization, lack of standardization and intransparency of classic certificate trading into this new market segment.

Building a One-Stop-Solution with the Blockchain Founders Group

However, compared to the legacy market, there is a possibility to bring transparency into the market segment for tokenized CO2 certificates. The number of providers is currently still manageable and the development of a database that allows projects to be compared on the basis of defined standards and key figures is still possible. With additional services, such as the forwarding to the respective project pages and the preparation of reports and analyses for accounting and tax reports, a real added value can be created for investors and companies.

Market Sounding and Product Development

As part of the program, we are now undergoing a market sounding. We are talking to leading experts in the industry and incorporating the findings directly into our product development.

Authors

Nadine, Wolfram and Timm combine competences from various areas such as operations, corporate communications, business development, finance, regulation, accounting and consulting.

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

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International Token Standardization Association

International Token Standardization Association

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The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.