As part of its growth strategy to widen its consumer base to include Muslim investors, US-based Carbon Market Exchange has secured a Fatwa certifying the Shariah compliance of its carbon-backed XCO2 token.
“Islam forbids wasting of resources and destroying the environment. It strongly emphasizes on eco-friendly ideas and principles. The modern trends of sustainable environment and green economy are aligned with the teachings of Islam and shariah. Therefore, projects like Carbon Market Exchange should be welcomed by the Muslim fraternity,” shared Dr Farrukh Habib, the co-founder and director of Shariah Experts, the UK-based advisory which issued the Shariah certificate to Carbon Market Exchange.
XCO2, which was developed on the Ethereum blockchain and the secondary scaling solution, Polygon, facilitates the offsetting of carbon footprint with cryptographic proof in a publicly auditable ledger. The price of XCO2 tokens is tied to the current market price of one metric tonne of carbon credits.
“We have assigned 10 XCO2 tokens to represent one tonne of carbon offset. The total XCO2 token supply is tied to the amount of carbon credits that are actively held by Carbon Credit Exchange at any given time,” explained the exchange on its website. “To claim the credit and have your wallet address tied to a carbon credit certificate, the XCO2 tokens must be retired. This will pull the tokens out of the total supply and assign the amount of credit to a user’s wallet address.”
Established in 2021, Carbon Market Exchange rolled out XCO2 in the first quarter of this year having acquired 1.3 billion carbon credits the year before, according to its published project timeline. In the third quarter of 2021, it committed US$25 million in donation to protecting the rainforest.
It plans to launch a non-fungible token (NFT) before the end of 2022 – the CMX, which provides a certificate of authenticity for carbon offsets purchased. The firm, which now has operations in the US, Belize, the UAE and Tanzania, has an ambitious goal of ensuring 30% of the planet is conserved by 2030. To support its ambition, Carbon Market Exchange has built a project pipeline which includes allocating US$1.5 million for an African safari preservation, releasing geographic location tied NFTs for carbon offsetting and acquiring 1.5 billion in carbon credits by the fourth quarter in 2023.
Carbon Market Exchange’s foray into the Islamic space comes as investors and financial institutions pay more attention to the opportunities of Islamic ESG finance. In April this year, Malaysia’s Shariah compliant Radiance Assets revealed that it was acquiring a stake in Canadian-listed firm DeepMarkit Corp to enable it, among others, to introduce carbon credit projects.