A Crypto Carbon Credits Exchange Is Created in Germany

Neutral and DLT Finance are betting on regulation as the pathway to institutional investor adoption.

AccessTimeIconFeb 6, 2024 at 2:00 p.m. UTC
Updated Mar 8, 2024 at 9:07 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

CORRECTION (Feb. 6, 2023, 16:14 UTC): A previous version of this story gave an incorrect description of the regulatory pathway the duo took to open for business.

Tokenized trading project Neutral and DLT Finance, a German brokerage firm, have built a blockchain-backed platform for carbon credits, or financial instruments that represent forests and renewable energy products that businesses can use to offset their carbon footprint.

The tokenized real-world asset (RWA) project isn't the first to bet that blockchain can improve the multibillion-dollar carbon credit market. However, it is the first to launch a regulated trading platform for tokenized environmental assets.

"We didn't see anyone building the market infrastructure that would allow for traditional traders to interact with these assets," Neutral CEO Farouq Ghandour said in an interview. He said his company is the "tech provider," and DLT Finance provides "the regulatory backbone."

The product removes the blockchain from the end-user experience. Basically, the 10 commodity trading houses and brokers that Ghandour said are being onboarded won't need to think about tokenizing this or decentralizing that – and they certainly won't need a MetaMask wallet.

Instead, the exchange will aim to be just like any other buttoned-up platform for commodities swaps, Ghandour said, with much better liquidity for large-scale trades than one might find on decentralized exchanges (DEXs).

"There's a lot of reluctance to work with DEXs," Ghandour said, explaining why the crypto world's existing blockchain-based carbon markets haven't really caught on – and how his might. He said it's very important for financial institutions to have a regulated counterparty.

Edited by Sheldon Reback.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Danny Nelson

Danny is CoinDesk's Managing Editor for Data & Tokens. He owns BTC, ETH and SOL.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.