BIS, UN, Hong Kong Monetary Authority concludes tokenized green bonds trial

Project Genesis 2.0 continued the joint effort of exploring blockchain opportunities for green investments.

The Bank for International Settlements (BIS), the Hong Kong Monetary Authority and the United Nations Climate Change Global Innovation Hub presented the results of their “Genesis 2.0” initiative. The project aims to explore the use of blockchain, smart contracts and the internet of things (IoT) for a global environment cause. 

The project resulted in two prototypes of tokenized green bonds, developed by two separate international teams, which are “de facto verified carbon credits” recognized by either international, national or other verification mechanisms.

As specified in the press release from Oct. 24, both prototypes of “green bonds” are developed using blockchain and smart contracts, which ensure the tracking of mitigation outcome interests (MOIs). MOI is an essential concept in the language of environment-conscious economic efforts. It allows issuers to borrow against the delivery of the carbon credits upfront and thus to fund their green economy projects in advance.

The first prototype, developed by Goldman Sachs, Allinfra and Digital Asset, showcased an ability to achieve smart contract-based delivery of bonds and MOIs, and provided source data transparency enabled by IoT technology.

The second prototype, developed by InterOpera in collaboration with Krungthai Bank, Samwoo and Sungshin Cement, was built on an interoperable host chain. With a combination of blockchain, smart contract and application programming interface (API) technologies, it also digitally tracked, delivered and transferred MOIs throughout the full green bond life cycle.

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Project Genesis 2.0 came as an extension of Project Genesis 1.0, conducted by the BIS and Hong Kong Monetary Authority in 2021. Back then, other private consortia tested the possibility of tokenization of retail green bonds using both a public blockchain and a permissioned blockchain. Project Genesis 2.0 sought to address issues of greenwashing and the additionality of green bonds.

BIS remains one of the most proactive explorers of the digital economy among multinational institutions. In September, it finished a multi-jurisdictional central bank digital currency (CBDC) pilot after a month-long test phase that facilitated $22 million worth of real-value cross-border transactions.