DigitalX and BetaCarbon deliver Indigenous Australian Carbon Token deal using XAUD stablecoin
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DigitalX Limited (ASX: DCC) known as a leading technology and investment company focused on blockchain consulting, digital asset funds management, and RegTech, is on a mission to become an ESG leader in the crypto space. And to do so, it’s enlisted the help of innovative, blockchain-enabled carbon-trading company BetaCarbon.
The two Australian companies have struck a unique deal that will utilise the Aussie-dollar-linked private stablecoin XAUD. And from a crypto use-case perspective, that’ll help promote the benefits of “atomic” stablecoin settlement (the instant exchange of linked assets via the blockchain).
There’s another added benefit to this carbon-offsetting, blockchain-based union, too – which is the support of Indigenous culture in northern Australia.
Let’s quickly look at each aspect of this in turn and how it all works…
So back in March, DigitalX added the XAUD stablecoin to its treasury as part of its digital-asset management strategy, converting an initial $500,000 into XAUD.
The stablecoin, incidentally, is pegged to the Australian dollar and is backed by the reserves of its founding blockchain company – TAU – which include APRA-regulated, ADI-issued hybrids and Australian investment-grade bonds.
Then, in early July, DigitalX used XAUD to buy 230,000 Australian Carbon tokens (BCAU), each of which is notionally backed by a delivered Australian Carbon Credit Unit (ACCU) held in the Australian National Register of Emissions Units and represents 1kg of carbon captured or avoided.
As BetaCarbon is built on the Ethereum network, BCAU tokens can be moved in and out of crypto wallets easily, traded on exchanges such as Uniswap, or safeguarded with a digital-asset custodian.
In the first stage of the transaction, BetaCarbon transferred the BCAU to a DigitalX wallet, after the carbon-trading company received the XAUD payment.
What happens next, is DigitalX will transfer the BCAU tokens back to a BetaCarbon wallet and will receive a non-fungible token (NFT) with a unique reference to the right to retire the 230,000 kgs of carbon represented by the BCAU.
The third and final transactional stage will occur when DigitalX instructs BetaCarbon to retire the carbon.
To do so, DigitalX needs to return the NFT to be surrendered permanently to a “burn” wallet, which results in the retirement of the ACCUs in the Australian National Register of Emissions Units maintained by the Clean Energy Regulator.
As BetaCarbon’s CEO Guy Dickinson explains, “supporting projects with environmental, social and Indigenous co-benefits is a top priority” for the crypto-age carbon-trading firm.
But how exactly does the DigitalX deal benefit Indigenous culture? As mentioned above, the BCAU bought by DigitalX represents ACCUs… but it’s actually a transparent portfolio of ACCUs that include units with Indigenous co-benefits.
And those particular units are linked to the ancient practice of savannah burning undertaken by Traditional Owners to combat uncontrolled wildfires in the Northern Territory and in Northern Queensland.
Once the full transactional process has taken place, and DigitalX’s BCAU-backed ACCUs have been retired, DigitalX will be issued with a certificate by the Clean Energy Regulator. This details the number of units and date by specific serial number associated with the savannah-burning project, and acts as official proof the offset took place.
The crypto industry, in particular crypto-mining-based Proof-of-Work blockchains such as Bitcoin, is known for having something of a PR problem when it comes to its carbon footprint.
DigitalX CEO Lisa Wade believes the BetaCarbon deal is a step towards mitigating the energy consumption, however…
“We are aiming to become an ESG leader in our field and part of that involves recognising the carbon liabilities associated with our digital-asset treasury holdings,” she said, adding:
“This transaction with BetaCarbon goes some way to addressing those liabilities as well as assisting with the regeneration of natural Australian habitat by the Traditional Owners of the land.
“And being able to complete this transaction with XAUD, is an indication of the world to come. Stablecoins will allow Australian corporates to transact cheaper, smarter and faster.”
For BetaCarbon’s part, Dickinson said: “We’re thrilled to be able to offer DigitalX and other wholesale clients a new and innovative way to manage carbon liabilities at a price point that was previously unattainable for the market. Providing new opportunities to participate in this asset class efficiently and transparently is at the core of BetaCarbon’s mission.”
This article was developed in collaboration with DigitalX, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.