Crypto industry write pass its own

But Robin Rix, the chief legal, policy, and markets officer at Verra, told TIME that while his organization definitely wants to scale up the carbon-credit market, it is now leaning towards trying to do so through bank-led initiatives, like Carbonplace, as opposed to crypto ones.

The decision will force Toucan and others to make a hard pivot in their operational models. Toucan’s initial response about Verra’s news was cautiously optimistic: it believes that Verra’s actions show Toucan’s outsize impact, and that despite Verra’s rhetoric about preferring banks, Toucan will nonetheless somehow play a role in this next stage of innovation.

Crypto industry helps write and pass its own agenda in state capitols

Somebody has to be in the arena, doing the work,” Ms. Long said in an interview.

Ms. Long worked on the banking legislation with Trace Mayer, a crypto investor and entrepreneur.

Both had invested in Kraken, a crypto exchange that also received a state charter.

Critics have accused Ms. Long of using her influence to enrich herself.

“They came in and started writing legislation that really gamed it to their advantage,” said Robert Jennings, who served with Ms.

Long on a coalition of crypto supporters in Wyoming. “It quit being about ‘How do we help Wyoming people?’ and quickly became ‘How do we game this system for the big crypto players?’”

Ms. Long said she hadn’t decided to start a crypto bank until months after Wyoming’s legislation passed, when it was unclear whether others would take advantage of the law.

“It’s not easy to find the right people,” she said.

Crypto industry write pass its own

Sweeping the floor

Toucan hoped that other crypto projects would build on top of its infrastructure. In October, an organization called KlimaDAO did just that, creating its own token, Klima, that could be acquired with Toucan’s token, BCT, with the hopes of turning carbon credits into an in-demand market commodity.
If crypto traders got involved and started investing in these tokens, KlimaDAO’s team argued, they might drive the price of the credits up, forcing polluting companies to either pay for higher-priced, higher-quality carbon credits or find more energy-efficient production methods.

KlimaDAO’s first approach was what they called “sweeping the floor,” or rallying crypto enthusiasts to buy the cheapest carbon credits available via Toucan.

Crypto industry write pass its owner

Market prices swung wildly, causing mild panic among traditional carbon-credit issuers and buyers.

Now, after several months of deliberation, Verra, the primary carbon credits issuer and a standard-bearer for the industry, has taken a stand against Toucan’s activity. On May 25, Verra announced it would ban the conversion of retired Verra credits into crypto tokens, which is Toucan’s central mechanism.
After just seven months, the first phase of the crypto’s supposed carbon-credit revolution is over.

Verra did open the door for a potential new chapter of collaboration, in which only live Verra credits could be tokenized. This would give Verra greater control and oversight over the flow of credits throughout these new markets.

Crypto industry write pass its owns

In the absence of federal regulations, crypto lobbyists and executives are going state by state to get favorable rules enacted. Many lawmakers have been willing partners.


— The debate took less than four minutes.

In the Florida House last month, legislators swiftly gave final approval to a bill that makes it easier to buy and sell cryptocurrency, eliminating a threat from a law intended to curb money laundering. One of the few pauses in the action came when two House members stood up to thank crypto industry “stakeholders” for teaming with state officials to write a draft of the bill.

“Whether you’re Binance or Ethereum, Dogecoin or Bitcoin, this is a great bill,” said Representative John Snyder, a Palm City Republican, referring to crypto exchanges and coins.

Shortly afterward, the House voted unanimously to pass the measure.

Smith, in an interview, said he did not consider his work in the industry a conflict, given that he had not applied for the tax credits his law created.

Nowhere has the potential for crypto advocates to profit on new legislation become more apparent than in Wyoming.

Since 2018, Wyoming has established more than 20 laws that make it easier for the crypto industry to operate. A key player was Caitlin Long, a Wall Street veteran and a crypto booster, who helped engineer a 2019 law that paved the way for banks handling digital assets to receive Wyoming charters.

Not long after the crypto banking legislation passed, Ms.
Long opened Avanti Bank and thanked Wyoming’s Legislature for making the business possible. The bank promptly received a state charter.

Last year, the business, now known as Custodia, raised $37 million from venture investors.

Last year, the startup Toucan launched with a bold vision: it was going to use the blockchain to upend the entire carbon credits system. The traditional voluntary carbon market—in which polluting companies can pay for credits that fund emission-reducing efforts—was disorganized, archaic, and lacked incentives, Toucan’s founders argued.

By pushing carbon markets onto the blockchain—a public and decentralized database—they felt they could turbocharge the climate fight with crypto economics, provide a global infrastructure data layer, and force polluting companies to either pay higher prices for carbon credits or seek more environmentally friendly approaches to their businesses.

And upend the system they did—though not necessarily in the ways that they hoped.

The idea was to ascribe a specific cost of the environmental damage of CO2 emissions, and then enable companies to purchase carbon offsets, which were similarly cost-assessed based on their ability to reduce environmental damage. Those credits might be tied to a forestation project, say, or a new wind farm.

But three decades later, the carbon market is still largely unregulated and fragmented, with interested parties squabbling over criteria for inclusion and decision-making processes.
Several studies have shown that the system has overvalued projects that have had little-to-no positive impact on the environment. One study from last year, for example, found that many forest-growing carbon-reduction projects in California systemically over-exaggerated their climate benefits.

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Saine said he recalled asking. “You tell me.”

Their collaboration resulted in a bill that Mr. Saine introduced last year creating a regulatory “sandbox” for financial technology projects — essentially a special license allowing the industry to test new products without following certain regulatory requirements.
The bill passed in October.

Solving the ‘Espinoza Problem’

In Florida, it began with the 2019 book “Bitcoin Billionaires.”

State legislators started working with the crypto industry after Mr. Aloupis read the book, which details the efforts of the Winklevoss brothers, who helped create Facebook, to generate new wealth in the crypto industry.


Meanwhile, it’s unclear what will happen to 22 million retired credits that have already been placed on chain, and whether they will be worth anything going forward. Both the Toucan and Klima tokens dropped severely in price following Verra’s decision.

The Twitter user who goes by Rez and is the head of protocol for the climate-crypto community Solid World DAO wrote on Twitter that Verra’s announcement sent the climate-crypto markets “into a sort of existential limbo.”

Crypto carbon proponents hope they will be able to help Verra build a new system of tokenizing “live” credits as opposed to retired ones. But Verra’s legal officer Rix told TIME that Verra is leaning toward working with a project like Carbonplace, which was created by a consortium of banks including CIBC and UBS.

Carbonplace has many similar aims to Toucan, including to scale and organize carbon markets.

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