Correction, 13 October 2026. An earlier version of this article listed a "CRBN.CREDIT DeFi" protocol on Polygon and promoted a CRBN.CREDIT DeFi Bridge and a marketplace of project tokens. None of these exist: CRBN.credit reads no blockchain, holds no tokens and sells nothing. The earlier version also said tokenization made double counting impossible, which is not correct. The article has been rewritten.
A tokenized carbon credit is a blockchain token issued against a carbon credit held in a registry. The token can be traded without the registry recording each trade, but it is only a claim: its value depends entirely on the credit behind it and on the arrangement that holds that credit. The 2021 boom in tokenized carbon faded after the largest registry stopped the bridging method it relied on, and in 2026 the question for any buyer is still the same one: what exactly sits behind this token?
This guide explains how tokenization works, what happened to the early market, the risks that remain, and how to check the credit behind a token.
- A token does not move or change the credit. The credit stays in a registry account controlled by the tokenizing operator.
- Early bridges retired credits on the registry and issued tokens against them. Verra stopped that practice in May 2022.
- Analysis of the first large pool found most bridged credits came from old projects that conventional buyers had passed over.
- A blockchain stops a token being spent twice on chain; it does not stop double counting between a registry, a token and a claim.
- For any claim, what matters is a registry retirement in the claimant's name, the methodology's status and the vintage, exactly as for any other credit.
What a tokenized credit is
A carbon credit is a record in a registry. The registry knows which project produced it, its vintage, its serial number and which account holds it. When it is retired, the registry records who claimed it and when. That chain of records is the credit.
Tokenization adds a second record outside the registry. An operator moves credits into a registry account it controls, then issues tokens on a blockchain against them, usually one token per tonne. The tokens can then be traded, pooled or used in applications on that chain without any change in the registry. Nothing about the underlying credit has changed. What has changed is that two systems now track it, and they must stay in agreement.
So a token is a claim on a credit, and its quality is the quality of three things together: the credit itself, the operator holding it, and the rules the registry applies to that arrangement.
Two ways to tokenize
Retire and mint. The first large bridges retired credits on the registry, often naming the bridge as the beneficiary, and minted tokens against the retired credits. This avoided the risk of the same credit being sold in both places, because the registry copy could no longer move. But it created a different problem: a retired credit is one whose benefit has already been claimed, and the token then circulated as if that benefit were still available.
Lock and mint, or immobilisation. The credit stays active in the registry but is locked in a dedicated account so it cannot be transferred or retired except when the corresponding token is redeemed or burned. Retirement then happens in the registry at the moment a token holder claims the benefit, which keeps the registry as the record of who claimed what. This is the model Verra proposed after 2022.
What happened to the first market
2021: the boom. In 2021 Toucan Protocol began bridging credits from Verra's registry to the Polygon blockchain as Base Carbon Tonnes, with KlimaDAO as its launch partner. Pools accepted any credit meeting a minimum standard, so a token from a 2008 project and one from a recent project traded as the same thing. Bridging grew quickly.
Quality problems. CarbonPlan's analysis of the bridged credits found that nearly all came from projects excluded from major parts of the conventional market on quality grounds, including a group of projects that had sat inactive until the chance to sell into pools appeared. Because the pools paid one price for any eligible credit, they drew in the cheapest supply.
2022: the registry response. In May 2022 Verra announced it would no longer allow tokens or instruments to be created from retired credits, effective immediately, on the basis that retirement means the credit's benefit has been used. It proposed allowing tokens linked to immobilised live credits instead, and consulted publicly on the approach, including know-your-customer checks on token issuers. The flow of new credits onto chains largely stopped, and pooled token prices fell well below their early-2022 levels.
Since then. The tokenized carbon market has continued at a much smaller scale, and several of its early projects have restructured. Registries, exchanges and banks have explored their own digital infrastructure for carbon, generally keeping the registry as the record of ownership and retirement. Check the current terms of any registry before relying on a tokenized product, because policies have been revised more than once.
What tokenization can and cannot fix
The problems tokenization set out to solve are real. Settlement in carbon markets can be slow, prices are mostly private, and small buyers have little access.
What it can do. A token can settle quickly between parties on the same chain, make trading activity visible, and let small volumes change hands cheaply.
What it cannot do. It cannot improve the credit underneath. A token backed by an over-credited project is an over-credited project in a new wrapper. It cannot by itself prevent double counting, because the risk lies between systems: a credit retired in a registry and also represented by a live token, or claimed by a company and also counted by a host country. And it cannot make a price meaningful if the pool lumps together credits of very different quality.
Where tokens may still be useful
Tokenization is not useless; it is narrow. It can make sense where a registry recognises the arrangement and the credits stay locked rather than retired, where each token carries its project, vintage, methodology and serial range rather than being pooled, and where redemption into a registry retirement in the holder's name is simple and documented. In that form a token works as a faster way to transfer a specific, identifiable credit. What it should not be is a way to sell an anonymous tonne of mixed quality, which is what the early pools became.
The risks that remain
- Registry risk. If a registry changes its rules, suspends a project or stops recognising an arrangement, tokens can be left against credits that cannot be cleanly redeemed.
- Operator risk. The operator holding the credits must remain solvent, honest and in good standing with the registry. A token holder usually has no direct claim on the registry account.
- Pool quality. Pooled tokens carry the quality of the weakest eligible credit, because that is what sellers will deposit.
- Information loss. If the token does not carry the project, vintage, methodology and serial range, a buyer cannot assess what it holds.
- Governance risk. Protocols run by token-holder votes can change eligibility rules.
- Legal and custody risk. The legal status of carbon tokens differs between jurisdictions, and institutional custody, accounting and tax treatment are not settled everywhere.
- Smart contract risk. Software errors or attacks can lose or lock tokens.
Tokens and climate claims
A token does not change the rules for claims. Under the SBTi's Corporate Net-Zero Standard V2.0, credits do not count toward reduction targets, whatever form they take. In the EU, Directive (EU) 2024/825 bans product neutrality claims based on offsetting from 27 September 2026. And a claim that will be examined, by an auditor, a regulator or a journalist, needs a registry retirement that names the claimant and the purpose. Burning a token on chain is evidence that a token was destroyed; it is not, by itself, evidence that a registry retired a credit for you. Our guide to what it means to retire a carbon credit explains what a retirement record should show.
How to check the credit behind a token
- Get the serial numbers. Ask the issuer for the registry, the project ID and the serial range behind the tokens. If they cannot provide it, stop.
- Check the registry status. Are the credits active and locked, or already retired? If retired, whose name is on the retirement?
- Check the project. Look up the project in the projects database for its registry record, issuance and retirement history.
- Check the methodology. Its version and ICVCM status, shown on each project's Credit Passport, and whether it has since been revised or rejected.
- Check the vintage. Pools often hold old vintages that conventional buyers avoid.
- Check the arrangement. Whether the registry recognises the operator's model, and what happens to tokens if it stops.
- Check redemption. How a token holder gets a registry retirement in their own name, how long it takes and what it costs.
Check the registry record, whatever the wrapper.
CRBN.credit reads no blockchain and quotes no token prices. It shows the registry record of 11,659 projects across seven registries, so you can see what a token's credits really are.
CRBN.credit provides data and research on carbon markets. It does not broker, sell or execute trades in carbon credits or tokens.
Frequently Asked Questions
What is a tokenized carbon credit?
A blockchain token issued against a carbon credit held in a registry account controlled by the tokenizing operator. The credit stays in the registry; the token is a claim on it, and is worth what that credit and that arrangement are worth.
Does tokenization prevent double counting?
Not by itself. A blockchain prevents the same token being spent twice on the chain, but double counting in carbon markets happens between registries, tokens, national inventories and corporate claims. That depends on the registry relationship and on how retirement is recorded, not on the chain.
What did Verra change in 2022?
In May 2022 Verra stopped allowing tokens or instruments to be created from retired credits, the method early bridges had used, because retirement means the credit's benefit has been claimed. It proposed instead that live credits could be locked, or immobilised, and consulted on how that would work, including know-your-customer checks.
Why did tokenized carbon prices fall after 2022?
Much of what had been bridged was old, low-priced credits from projects other buyers avoided, so pooled tokens filled with the least defensible supply. When the main registry stopped retire-and-mint bridging, the flow of new credits largely stopped as well.
Can a company use a tokenized credit for a net-zero or neutrality claim?
The same rules apply as for any credit. Under SBTi V2.0 credits do not count toward reduction targets, and EU law bans product neutrality claims based on offsetting. The claim also needs a registry retirement that names the company, not only a burned token.
Does CRBN.credit trade or price carbon tokens?
No. CRBN.credit reads no blockchain, holds no tokens, quotes no token prices and runs no bridge. It shows the registry record of the credits behind a token, if you have the serial numbers.
Sources
- Verra, announcements on crypto instruments and tokens, November 2021 and May 2022, and the 2022 public consultation
- CarbonPlan, analysis of credits bridged by Toucan Protocol, 2022
- Science Based Targets initiative, Corporate Net-Zero Standard V2.0, June 2026
- Directive (EU) 2024/825 on empowering consumers for the green transition
- CRBN.credit project database, compiled from the registries of Verra, Gold Standard, the Climate Action Reserve, ACR, Cercarbono, Isometric and ART TREES
A note on this article. Registry policies on tokenization have changed more than once. Check the current rules of the registry concerned before relying on any tokenized product. General information, not investment advice.