Financial institution Northern Trust to explore blockchain technology for settling carbon credit trades using conventional currency.
## Northern Trust Leads the Way in Blockchain Settlement Trials
In a significant stride towards the integration of blockchain technology and traditional financial systems, Northern Trust, a leading global financial services provider, is making significant contributions to Project Acacia, an initiative run by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC).
The Northern Trust Carbon Ecosystem, the company's carbon credit platform, is facilitating the integration of tokenized carbon credits with conventional financial systems. This innovative delivery-versus-payment (DvP) model allows for the simultaneous settlement of tokenized carbon credits and conventional payments, ensuring real-time, atomic settlements [1][2][4].
Project Acacia, launched in 2020, aims to explore various forms of tokenized money and assets, including wholesale CBDCs, tokenized deposits, and stablecoins [3]. Northern Trust's involvement underscores its commitment to digital finance initiatives, following its contributions to blockchain projects in Singapore, Hong Kong, and Australia [1][2].
Justin Chapman, Group Head of Strategic Partnerships, Digital Assets and Financial Markets at Northern Trust, stated that the delivery-versus-payment of tokenized assets is a present-day reality [1].
Other regions are also embracing the use of distributed ledger technology (DLT) for financial settlements. Europe, for instance, has conducted a series of DLT settlement trials and is moving towards a production offering [2]. The UK is planning to leverage DLT for settlement purposes, focusing on wholesale transactions initially [2].
Singapore and Hong Kong have also seen Northern Trust's involvement in blockchain initiatives. In Singapore, the company participated in Project Guardian, focusing on tokenizing green bond data [2]. In Hong Kong, it was part of Project Ensemble, which involved cross-border carbon credit trading [2].
As one of the largest custodians in the world, with $17 trillion in assets under custody, Northern Trust is well-positioned to lead the way in the digital transformation of the financial industry [5]. The company is also a founding shareholder in digital asset custody firm Zodia Custody [2].
Swift is collaborating with Northern Trust for the simulation of Project Acacia [3]. Last week, 24 use cases were selected for Project Acacia [3]. Project Acacia aims to prove that the linking of emerging asset types with traditional infrastructure is possible [3].
These initiatives highlight the growing interest in using DLT to improve the efficiency and security of financial settlements across different regions, paving the way for a more streamlined and secure financial future.
[1] https://www.northerntrust.com/insights/news/northern-trust-and-swift-announce-collaboration-on-carbon-market-solutions [2] https://www.northerntrust.com/insights/news/northern-trust-and-swift-announce-collaboration-on-carbon-market-solutions.html [3] https://www.rba.gov.au/news/media-releases/2021/mr-21-04.html [4] https://www.northerntrust.com/insights/news/northern-trust-and-swift-announce-collaboration-on-carbon-market-solutions.html [5] https://www.northerntrust.com/who-we-are/corporate-profile/company-overview.html
- Northern Trust's involvement in Project Acacia underscores its dedication to exploring tokenized forms of money and assets, such as stablecoins and CBDCs, in collaboration with Swift.
- The company is increasingly leveraging blockchain technology, most notably in its carbon credit platform, for tokenization and real-time, atomic settlements of assets.
- With assets under custody totaling $17 trillion, Northern Trust is poised to drive the industry's digital transformation, particularly in the tokenization of assets such as green bonds and carbon credits.
- As the financial industry undergoes technological evolution, initiatives like Project Acacia demonstrate a growing global effort to improve settlement efficiency and security using distributed ledger technology (DLT), paving the way for a more secure and streamlined future.
