Northern Trust introduces digital carbon credit trading platform

Financial services company Northern Trust has launched an institutional carbon credit ecosystem on its Northern Trust Matrix Zenith digital assets platform. Northern Trust will act as the custodian and record, transfer and settle digital carbon credit trades against “emission footprints” on the voluntary carbon market.

Legal agreements are generated by smart contracts on the permissioned blockchain, and those agreements serve as the basis for trading digital carbon credits for fiat currency and thus “retiring” them.

Ecosystem encompasses full cycle

The Northern Trust Carbon Ecosystem reached the minimum viable product stage in September 2023 with two project developers and three purchasers, including Northern Trust. The full version was launched with a similar number of participants.

The system supports the digital asset lifecycle from asset creation, pricing, trading, and custody to reporting, Northern Trust global head of Digital Assets and Financial Markets Justin Chapman said. He added:

“The Northern Trust Carbon Ecosystem is just one example of the current and future planned applications of Northern Trust Matrix Zenith. […] Leveraging blockchain technology, Northern Trust Matrix Zenith integrates with our core traditional asset servicing infrastructure to support digital and traditional assets side-by-side.”

A carbon credit represents one ton of carbon reduction or removal. It offsets the carbon dioxide or other greenhouse gas emissions from a project. UK-based small business Water Recovery Systems IP and Lichtenstein-based CUT Carbon Distributed Technologies were the first carbon credit sellers on the new system.

CUT launched its Carbon Utility Token (CUT) to facilitate trading in tokenized carbon credits on Arbitrum in June 2023.

Northern Trust is one of the co-founders of Zodia

Adapt Global Limited, a global telecommunications company with a focus on sustainability, was the only buyer mentioned by Northern Trust.

Related: KlimaDAO Japan to launch carbon credit marketplace with Progmat

Northern Trust has had a hand in blockchain projects for years. It partnered with PwC to put private equity data management on-chain and began offering digital asset custody in 2018. It is also one of the co-founders of Zodia Custody and has participated in blockchain-related projects with SWIFT, EY and others.

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