[NEWS] Mitsubishi UFJ Trust, Progma and others begin joint study on using JPYC for digital carbon credit payments

Mitsubishi UFJ Trust Bank, Progmat, JPYC, KlimaDAO Japan, and OPTAGE announced on the 21st that they have begun a joint study to use the Japanese yen stablecoin "JPYC" issued using the Progmat Coin platform for digital carbon credit payments.

The JPYC being considered for use in digital carbon credit payments will be a "trust-type JPYC" that is being considered for issuance using the Progmat Coin platform. This is different from the JPYC that has already been issued as a prepaid payment method, and is planned to be issued as a stablecoin as an electronic payment method based on the revised Payment Services Act that came into effect in June last year.

The issuance of the trust-type JPYC will be after JPYC completes its registration as an electronic payment method trading business, and it will be possible to refund it in cash.

This joint study is about realizing a digital carbon trading market using domestic stablecoins. Specifically, by linking the carbon credit market "KlimaDAO JAPANMARKET" operated by KlimaDAO Japan with the Progmat Coin platform, we are focusing on the feasibility of inter-company carbon credit trading that ensures high transparency, reliability, and efficiency.

In addition, by linking with the carbon marketplace "Carbonmark" that KlimaDAO has already begun offering globally, we aim to create cross-border global liquidity by using various domestic stable coins for payment.

This series of efforts has been divided into phases, and the demonstration positioned as "Marketplace Phase 1" began in April this year. The phase announced this time in which stable coins are used for payment has been defined as "Marketplace Phase 2".

In Phase 2, by making it possible to trade stable coins in addition to digital carbon on the corporate infrastructure provided by OPTAGE, we aim to enable parties to participate at any time without time constraints and to complete transactions between parties on a transparent and reliable permissionless blockchain.

Furthermore, by taking advantage of the permissionless blockchain's characteristic of enabling cross-border value transfer, Carbonmark and KlimaDAO JAPANMARKET are expected to collaborate to sell digital carbon originating in Japan overseas. In addition to carbon credits, they plan to build a system that allows trading of other environmental values, including non-fossil certificates.

In the upcoming "Marketplace Phase 3," they plan to provide support to domestic financial institutions and business companies that want to operate their own marketplaces, including for overseas sales.

▶ Marketplace Phase 2 image reference: Press release

What is carbon credit?

Carbon credit is a system that allows companies to trade the amount of greenhouse gas emission reduction between each other, and is also called "carbon credit". Companies quantify the amount of greenhouse gas reduction or absorption generated by environmental activities, and trade the certified emission rights as credits with other companies.

As a result, greenhouse gas emissions that cannot be reduced can be offset by purchasing carbon credits. Offsetting emissions in this way is called "carbon offset".

According to the announcement, the size of the global carbon credit market exceeds approximately 39 trillion yen. Of this, the VC (voluntary credit) market, which is carbon credits purchased voluntarily by companies and individuals, is currently approximately 45 billion yen, but is said to reach 27 trillion yen by 2030. In Japan alone, it is predicted that the carbon credit market will reach 300 billion yen by 2030.

In Japan, the Tokyo Stock Exchange opened a trading market for J-Credit in October 2023. However, the announcement points out that the amount of trading is currently limited, and although the VC marketplace exists, the liquidity is not high.

Under these circumstances, KlimaDAO Japan is planning to use the globally deployed Carbonmark platform to open KlimaDAO Japan MARKET, a marketplace for J-Credits and Japanese VCs, and gradually provide liquidity on a global basis.

Digital Carbon is a token issued by KlimaDAO Japan on a globally accessible permissionless blockchain to represent the right to claim delivery of J-Credits, etc., that KlimaDAO Japan has purchased from companies and local governments.

Optage will provide the infrastructure required for companies to access the blockchain and manage Digital Carbon, and will set up a market in an environment where companies can easily participate in transactions by settling funds via bank transfers, etc.

Reference: Press release
Image: Press release

Related articles:

"Progmat Saito Tatsuya x JPYC Okabe Noritaka" Exclusive Special Interview What will the two talk about in the first year of stablecoin social implementation

JPYC collaborates with Mitsubishi UFJ Trust and Banking Corporation and Progma to begin joint discussions on issuing "trust-type JPYC"