Carbon Credit Tokenization

Definition ∞ Carbon Credit Tokenization involves converting traditional carbon credits into digital tokens on a blockchain. Each token represents a verified unit of greenhouse gas reduction or removal, making these credits more liquid, transparent, and accessible for trading. This process uses blockchain technology to improve the integrity and traceability of environmental assets.
Context ∞ Carbon credit tokenization is a growing area within digital finance, aiming to enhance the efficiency and credibility of global carbon markets. News often highlights initiatives that bring these environmental assets onto various blockchains, discussing their capacity to address climate change and attract institutional investment. Regulatory frameworks for tokenized carbon credits are still forming, affecting their market acceptance.