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ANZ says blockchain can build a better carbon market

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ANZ says blockchain can build a better carbon market

The current carbon credit system has come under heavy criticism for its potential conflicts of interest and lack of transparency and is subject to independent review.

He described the market as immature and defined by “often fuzzy carbon credits and quite clunky means of transaction – and yet we seek to transition to a world made possible by digitized tokens and decentralized finance.”

He said ANZ believes an exchange using “tokenized” carbon credits (digitized contracts traded via blockchain) would offer the best chance of creating an efficient and liquid global market for issuers and investors.

“Our ability to tokenize carbon credits and offer a means of digital settlement with our stablecoin is a great example of how we believe we can participate in the transition and help accelerate it,” he said.

ANZ Chairman Paul O’Sullivan: “We believe that adopting a highly efficient and secure infrastructure will accelerate the scale and credibility of [carbon] market places. » oscar colman

ANZ is already experimenting with the new infrastructure. In June, a private investor The Victor Smorgon Group used A$DC to purchase Australian Carbon Credit Units (ACCUs) which had been “tokenized” by BetaCarbon, a carbon trading platform, to create digital security tokens known as BCAUs.

Mr O’Sullivan said NFTs could be used to create a secure representation of a carbon offset; for example, codifying credit origin and outcomes, which will also facilitate secondary market trading of new securities.

“One of the main challenges with carbon offsets is gaining confidence in provenance, whether they are genuine and whether they will be delivered,” he said. “We believe these challenges can be mitigated by verifying and encrypting project-specific credentials using non-fungible tokens, which addresses many greenwashing concerns.”

Wendy Mackay, Managing Director of Pollination, told the event that creating liquid markets using new technologies would not only help to value carbon, but also natural assets. as banks are pushed to commit to biodiversity.

“We need to radically change economic systems and financial systems because the scale of change that needs to happen is huge,” she said. “There are trillions of dollars of investment that are needed here… We need to change the rules and help the investors who come to us and say there’s not enough product right now.”

The event at the ASX brought together Reserve Bank Governor Philip Lowe, ASX CEO Helen Lofthouse and Ellis Connolly, the RBA’s head of payments policy.

pivot point

Andreas Furche, CEO of the research center, said blockchain technology can help transform a property registry, typically seen as part of the back office, into a transactional engine enabling the trading of digitized representations of a wide variety of properties. instruments. It creates “exchange, clearing and settlement all together to become a single transaction,” he said. “Blockchain started to make people think differently.”

Mr Jones said the Albanian government strongly supports the development of digital financial apps to improve the efficiency of the financial system, under appropriate “safeguards” to protect users.

“It is no exaggeration to say that we are at a turning point in the way commerce is done, and no greater pivot than the invention of money as a medium of exchange, the digitization of everything, including including currency itself. It’s exciting, while also creating huge challenges for regulators and businesses,” he said.

The government is “pleased” to see the Reserve Bank exploring potential use cases for a “central bank digital currency”, and said it is excited about the ““tokenization” of real-world assets because “this is an area where consumers will see a direct and real benefit”, indicating new ways to enter the real estate market.

Last week, the government said it would pursue a “token mapping” exercise define different crypto tokens to inform the future regulatory approach.

“We want the regulations to be right because we want to make sure the guardrails are wide enough apart to allow for innovation, but we want to make sure that innovation happens in a safe ecosystem,” Jones said. .

The DFCRC will also investigate the application of blockchain and digital currency by the mining and mineral industry, as well as the potential use of central bank digital currency and stablecoins in “decentralized finance,” where blockchain is used to mimic traditional banking activity without intermediaries.

Members of the DFCRC board of directors were present at the event on Monday evening: former ASIC president Greg Medcraft, Trovio Jon Deane, Challenger chief financial officer Rachel Grimes and media manager Clare Gill, and the professors Julie Cogin of RMIT and Dan Johnson of Macquarie University, as well as former senior federal official Neville Stevens, who is chairman of the board.

Mr. Stevens paid tribute to the Hawke government for creating the CRC program, while Mr. Jones thanked the previous government for investing $60 million in the DFCRC (which was supplemented with private funding to bring the total to $181 million). “It was a commitment made by them, taken up with new energy, vigor and motivation by the Albanian Labor government,” he said.

“Real-Time Disintermediation”

Mr. O’Sullivan said that DeFi, artificial intelligence and the emergence of Web3 “will accelerate the pace of change, not stabilize it or slow it down”.

“One of the things we’re seeing in real time is the disintermediation of the traditional big bank value chain,” he said.

“Previously, where we had to do everything end-to-end, these technologies increasingly allow someone else to find a better or cheaper way of doing things and come in and disintermediate that part of the value chain. The reality is that this is going to happen whether the banks choose to participate or not. »

The former Optus executive cited M-Pesa in Kenya as an example of how mobile phones in Africa have brought finance to the unbanked. While Australia had different challenges, “we will continue to see technology, telecommunications and financial services continue to merge and the lines between them become increasingly difficult to differentiate,” he said.

Using the Ethereum blockchain to trade carbon credits could expand access to emerging carbon markets for retail investors, while the technology could be used to facilitate micropayments to enable the trading of alternative energy via apps.

Under the terms of its carbon credit agreement with Victor Smorgon and Zerocap, ANZ provided redemption rights for A$DC, ensuring that the tokens could be transferred in cash to Australian dollars. The A$DC is fully backed by Australian dollars and repayable at par with funds held in a reserve account managed by ANZ.

One of the first DFCRC projects, in partnership with the RBA, will involve the development of a limited scale CBDC pilot which industry participants will be invited to engage with, demonstrate innovative and value-added use cases for a CBDC. The project is expected to last around a year, after which a report on the results will be published, including an assessment of the various use cases developed, the RBA announced last week.

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