XTCC, a blockchain-enabled exchange-traded carbon credit investment provider, is set to launch a suite of Shariah compliant carbon credit investment products this week, Dr Scott Levy, the managing director of Al Waseelah, which is the issuance platform for XTCC’s Islamic offerings, told ISFI, IFN Fintech’s sister publication.
“The industry of carbon credits has recognized what makes a high-quality credit. What we have done is created the next logical step by making these high-quality credits investible,” Dr Scott shared.
According to Dr Scott, investors should be able to buy and hold carbon credits just like they do with any other commodity like gold and lithium.
Currently, XTCC has roughly US$200 million-worth of high-quality credits ring-fenced for its investment proposition.
XTCC, which opened shop earlier this month, is set to roll out a series of offerings over the coming months.
This week, we will see the launch of three products as part of its debut offering: an open-ended fund, a three-year fund and a four-year principal-protected fund in the Emirati dirham and US dollar denominations.
The fixed-term products will be a rolling investment, with a new tranche opening for investment every three months.
The open-ended fund and the three-year funds comprise 100% carbon credits. In contrast, the four-year principal guaranteed fund has a 20/80 carbon credit to Sukuk ratio. The Sukuk portion of the portfolio will comprise investment-grade Sukuk papers.
According to Dr Scott, XTCC is already in talks with the wealth management divisions of two household-name banks in the UAE to feature XTCC investments on their platforms.
The launch of the products will be on the Bermuda Stock Exchange and Deutsche Borse. According to Dr Scott, the only way to address the issue of mispricing in the market, where pricing does not conform to the concept of equivalency between each metric ton of carbon offsets, is through listing the product on an exchange.
Also in the works for XTCC is the pound sterling (GBP) offering for the investment funds, which is expected to be launched within a span of two weeks from the launch of the funds. In anticipation of the launch of the GBP offering, XTCC is in talks with UK wealth managers.
“The GBP one is really exciting for us because it will be UK tax-compliant. It will be the first Shariah compliant product of its kind that could go to UK pension investments,” Dr Scott shared.
While carbon credits from solar power projects are easily understood and are uncontroversial from a sustainability perspective, which is why it is the first type of carbon credit XTCC is featuring, Dr Scott shared that the platform is looking to expand its projects to seven in the next two months.